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RBI denies para-banking license to Sahara

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By NewsGram staff writer

Lucknow: In a fresh setback to the beleaguered Sahara India Pariwar, Sahara India Financial Corporation Limited’s license holding has been cancelled by the Reserve Bank of India (RBI) on Tuesday.

reserve-bank-of-india-550x524The action has been taken by the department of non-banking supervision of the RBI, in Kanpur.

The move comes in wake of several irregularities and ignoring financial rules and regulations by Sahara, an official further informed.

The notice regarding cancellation of the license to conduct financial business has been sent to the Kapurthala headquarters of Sahara India.

The move is being seen as the ‘final nail’ in the fortunes of the once-fledgling company as the SIFCL was its core wing from which money was collected through small time subscribers and then routed to other wings such as media, real estate and others.

With its chairman Subrata Roy Sahara already in jail for more than a year, the RBI action, many fear, could “break the financial spine” of the organisation.

Under the new order, the Sahara India would be barred from any sort of financial transactions.

The RBI had in 2008 barred the company from taking any deposits from the people under its chit fund operations.

Many depositors had since then complained to the RBI that they were not being paid back their money by Sahara, following which a probe was ordered by the bank.

A report of the investigations was sent to the RBI HQ in Mumbai last month after which the penal action of cancelling the license of SIFCL was taken.

(with inputs from IANS)

 

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RBI May Recoup Reserves, Strong Inflow of Foreign Funds And Benign Oil Prices Strengthening Indian Currency

A major factor supporting the rupee is the strong prospect of better fund flows from abroad.

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RBI
Experts now see a chance for the RBI to recoup the reserves it spent in 2018 defending the rupee. Pixabay

A strong inflow of foreign funds and benign oil prices have strengthened the Indian currency but what has worked best for the rupee is the fading impact of war hysteria. Experts now see a chance for the RBI to recoup the reserves it spent in 2018 defending the rupee.

Putting a number to this, Gurang Somaiya, currency analyst at Motilal Oswal, said: “It is possible that RBI may limit some of the appreciation and recoup some of its lost reserves… but it may only come if the rupee strengthens to around Rs 68.20 a dollar.”

Explaining the factors at play, Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, said: “Post-Abhinandan (shooting down of the IAF pilot), geopolitical risk has subsided which has boosted investor sentiments.”

oil prices
The decline in crude oil, which accounts for a large import bill for India, directly affects the exchange rates.
Pixabay

Banerjee added that the gains of the rupee will help the Reserve Bank of India recoup reserves which it lost last year in a bid to arrest its fall.

“The rupee appreciated and closed at 70.14 for the last week on the back of strong flows and fading impact of war hysteria,” said Sajal Gupta, Head Forex and Rates, Edelweiss Securities.

In addition, Gupta said that some “big flows are lined up next week. Maybe Arcelor Mittal money can hit the Indian markets which can lead to some more appreciation towards 69.50 unless the RBI intervenes”.

However, the rising dollar index is causing nervousness and any breakout may lead to a reversal in the rupee’s trend, said Gupta. Somaiya said that RBI may choose not to intervene as the central bank’s prime aim was to arrest volatility.

“Yes the rupee is inching below the 70-a-dollar mark but then the (general) election can cause massive volatility. Also, it is seen that a lot of central banks are getting into a dovish stance owing to the fears of global slowdown.”

The RBI had to stop the slump in the rupee late last year after it touched an all-time high of 74.47 on October 11 following the rising crude oil prices.

dollar
However, the rising dollar index is causing nervousness and any breakout may lead to a reversal in the rupee’s trend, said Gupta. Somaiya said that RBI may choose not to intervene as the central bank’s prime aim was to arrest volatility. Pixabay

The Brent Crude touched $86-a-barrel mark in early October but started to ease following the US decision to exempt 8 countries, including India and China, to continue buying oil for six months from Iran despite sanctions.

The decline in crude oil, which accounts for a large import bill for India, directly affects the exchange rates.

A major factor supporting the rupee is the strong prospect of better fund flows from abroad.

Also Read: The Dining Table Starts Turning To The DIEning Table, Is Eating Alone Healthy?

“Inflows into India have clearly turned positive since the end of January. The flows in February at Rs 17,720 crore is the highest since November 2017. The trigger for this inflows is the dovish statement that came from the Fed at the end of January,” said V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

India’s foreign exchange reserves stood at $401.78 billion as against $393.13 billion in November last year. As the data suggests, with improving macros, the forex is already on the recovery path. (IANS)

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