Sahara says RBI cancellation of NBFC licence mutually decided

New Delhi: A day after the RBI announced cancellation of NBFC licence of Sahara India Financial Corp Ltd, the group Tuesday said the decision was as per "a mutually decided arrangement" between the central bank and the company.

The crisis-hit group also said it will overcome this "momentary constraint" once its bank accounts and properties are de-frozen by the Supreme Court and the judicial custody of its Chairman Subrata Roy is recalled.

"Sahara stands on strong foundations which are evident from its un-withered standing even during the current constraints," it said in a statement.

Asserting that the RBI's latest decision "is not at all any kind of blow to Sahara in any manner, the group said the RBI in 2008 had issued an order banning NBFC (Non-Banking Financial Company) business of one of Sahara's company - Sahara India Financial Corporation Ltd (SIFCL).

Against this RBI order, Sahara had approached the Allahabad High Court and subsequently the Supreme Court of India, which asked the central bank to hear SIFCL afresh.

"In pursuance of this, SIFCL and the RBI in a series of meetings in a mutually accepted manner decided a sun-set period for the NBFC business of SIFCL, whereby from 2011, SIFCL was to stop taking fresh deposits and return the erstwhile deposits and eventually, in 2015 close the NBFC.

"It is in pursuance of this mutually decided upon arrangement and as per the wish of Sahara that the RBI has cancelled this licence and therefore is not at all any kind of blow... To Sahara in any manner, as is being mentioned by some," the group said.

On Sebi's order on Sahara Mutual Fund, the group said "the mutual fund business of Sahara is very small with total assets under management of Rs 134.29 crore only and is in infancy state with no major consequences on the group".

"Moreover, the actual reason behind Sebi's action is that Sebi has asked to change the sponsor company in which Subrata Roy Sahara was there. Sebi can only explain the basis of their decision to do so. However, Sahara is in the process of doing the needful as Sebi has directed," it added.

The RBI had yesterday said it has SIFCL's certificate of registration as NBFC with effect from September 3. The NBFC was registered in December 1998.

Earlier, markets regulator Sebi had cancelled mutual fund and portfolio management licences of other firms of the group, which is engaged in a long-running battle with the regulator in a case related to refunds totalling thousands of crores of rupees. Its chief Subrata Roy is in jail since March 4, 2014.