This is the fallout of the Reserve Bank heat on the chit fund king Subrata Roy. The Roy-promoted Sahara group has surrendered the NBFC (non-banking finance company) licence of the group companies - Sahara India Investment Corporation Ltd (SIIC). The company has decided to voluntarily exit the NBFC business, while it has changed its objective to undertaking real estate business activities.
In a statement issued on Friday, RBI said that Lucknow-based SIIC has voluntarily exited non-banking financial business. "As such the Reserve Bank of India (RBI) has cancelled, on August 11, 2008, the certificate of registration of SIIC for carrying on the business of a NBFC".
In its new role, the company is likely to take over all the real estate activities of Sahara including Sahara City. In a statement issued here on Friday, the company said, "Sahara India Investment Corporation Limited (Non Deposit Taking Non Banking Finance Company) has voluntarily surrendered the licence to act as an NBFC. The management has decided to carry out real estate business in the said company. The above company is distinct from Sahara India Financial Corporation Limited, which is involved in the business of Para Banking that is deposit mobilisation."
Sahara India Investment Corporation is distinct from Sahara India Financial Corporation (SIFCL), which is a residuary NBFC that accepts public deposits. SIFCL was under the Reserve Bank of India (RBI) scanner recently. In a statement issued from the banking regulator, RBI said that on August 11, 2008, it cancelled the registration of Sahara India Investment Corporation.
It is still to be seen if this decision would have any bearing on Sahara India Financial Corporation, which had around four million depositors. It is also not known yet if there were any cross-holding issues between Sahara India Investment and Sahara India Financial Corporation.
According to the new timeline set by RBI, Sahara India Financial Corporation has been allowed to invest deposits that mature in three years. It has been asked to have zero liability by June 30, 2015.