Sahara to accept deposits maturing till June 2011
In a major relief to Sahara group, RBI today allowed the para-banking entity Sahara India Financial Corp Ltd to accept new deposits maturing till June 2011.
"SIFCL is hereby directed not to accept any new deposit which matures beyond June 30, 2011 and to stop accepting installments of existing deposit accounts also with effect from that date," RBI said in an order which followed two meetings between Sahara group and RBI officials.
In its earlier order on June 4, RBI had barred SIFCL from accepting fresh deposits from the public and had directed the company to repay the depositors on maturity.
RBI said that the fresh order is being given after taking into consideration all the oral and written submission made by SIFCL and to protect the interests of depositors.
The Reserve Bank in its order also directed SIFCL to ensure 100 per cent compliance with the KYC (Know Your Customer) norms for all new deposits.
RBI said it has incorporated in its new order the offer made during personal hearing by SIFCL officials, which include reconstitution of the board within 30 days from June 16 with 50 per cent of independent directors acceptable to the central bank.
SIFCL also offered to get the board appointments ratified at its ensuing AGM and to continue with the arrangement till all the depositors are repaid in full.
While directing SIFCL not to accept deposits maturing beyond June 2011, RBI also told the company to limit its Aggregate Liability to Depositors (ALD) at Rs 15,000 crore by June 30, 2009, Rs 12,600 crore by June 30, 2010 and Rs 9,000 crore by June 30, 2011.
"SIFCL shall repay the deposits as and when they mature and bring the ALD to zero on or before June 30, 2015," the release said.
RBI also directed SIFCL not to consider as default the non-payment of installments under daily deposits or recurring deposit schemes by depositors after June 2011. SIFCL would be liable to pay the agreed rate of interest on amounts actually held by it for the entire term of the deposit as if there was no default.
The company also promised to appoint statutory auditors from the panel suggested by RBI at the ensuing AGM of the company to be held by August 31, 2008 and to continue to appoint statutory auditors each year from such panel till all depositors are repaid in full.
The Reserve Bank has also directed SIFCL to submit a comprehensive business plan by August 16 and carry out its activities "in accordance with the law."
The company, according to the order, will "strictly comply with the requirement of all the applicable provision of the RBI Act, the direction, guidelines, instructions and circulars issued by RBI thereunder from time to time until such time as all the deposits are repaid with interest in full."
The RBI in its earlier order on June 4 prohibited the SIFCL from accepting fresh deposits and asked the company to repay the depositors.
The company, however, moved the Lucknow Bench of Allahabad High Court and obtained a stay order against the decision of the RBI.
Following the stay, RBI approached the Supreme Court which directed the central bank to provide a personal hearing to SIFCL functionaries and pass a fresh order.
In pursuance of the Supreme Court order, the RBI invited senior SIFCL officials, including Chairman Subroto Roy, for discussions on June 12 and June 16.
The present order follows discussions between the RBI and the SIFCL.
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