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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 Won’t Hesitate on Steps for Financial Stability, Says Governor

Das further said that in a flexible inflation targeting framework, a delicate balance needs to be maintained between inflation and growth objectives

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Reserve Bank of India. VOA

Assuring the crisis-hit NBFC sector will be monitored, Reserve Bank of India Governor Shaktikanta Das on Friday said the central bank will not hesitate to take any required measure to maintain the financial stability of the economy.

In a lecture at the Lal Bahadur Shastri National Academy of Administration, Mussoorie, on the “evolving role of central banks”, Das also said that financial stability is major factor considered in the RBI’s monetary policy.

“In the non-banking sector, the Reserve Bank has recently come out with draft guidelines for a robust liquidity framework for the NBFCs. We are also giving a fresh look at their regulatory and supervisory framework. It is our endeavour to have an optimal level of regulation and supervision so that the NBFC sector is financially resilient and robust,” he said.

“The Reserve Bank will continue to monitor the activity and performance of this sector with a focus on major entities and their inter-linkages with other sectors. The Reserve Bank will not hesitate to take any required steps to maintain financial stability,” he added.

Reserve Bank of India. Wikimedia Commons

The liquidity crisis in the non-banking financial companies (NBFC) came to light when IL&FS defaulted on a commercial paper in September.

Das further said that in a flexible inflation targeting framework, a delicate balance needs to be maintained between inflation and growth objectives.

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“Post global financial crisis, it has been recognised that price stability may not be sufficient for financial stability and therefore financial stability has emerged as another key consideration for monetary policy, though jury is still out as to whether it should be added as an explicit objective of monetary policy.

“The fact remains that though the focus of monetary policy is mainly on inflation and growth, the underlying theme has always been financial stability,” the Governor said. (IANS)