High Court stays RBI ban on Sahara accepting deposits

June 6th, 2008 - 12:34 am ICT by IANS  

Lucknow, June 5 (IANS) The Lucknow bench of the Allahabad High Court Thursday evening stayed a directive by the Reserve Bank of India (RBI) to Sahara India Financial Corp Ltd (SIFCI) not to accept any deposit. A division bench comprising Justice Shabihul Hasnain and Justice V.K. Dhawan in response to a petition by the Lucknow-based company stayed the ban and fixed the next hearing for July-end. The company is owned by industrialist Subrata Roy.

The RBI Wednesday banned Sahara from accepting any public deposits with immediate effect, blaming it for violating various rules governing non-banking finance companies.

The RBI order asked the company to notify all its agents and employees not to accept any deposit as well as to paste a copy of the directive prominently at all its branches and offices.

Later, the Uttar Pradesh government, which was also communicated officially about the ban, wrote to the RBI seeking details about how it would protect the interest of the small depositors who had already invested in Sahara.

In a letter to RBI executive director G. Gopal Krishnan Wednesday evening, Uttar Pradesh Chief Secretary Atul Kumar Gupta expressed concern over possible law and order fallout of the RBI directive if there was a run on the company by its depositors.

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