Supreme Court asks RBI to hear Sahara’s explanation (Lead)

June 9th, 2008 - 10:41 pm ICT by IANS  

New Delhi, June 9 (IANS) The Supreme Court Monday set aside a Reserve Bank of India (RBI) directive banning Sahara India Financial Corporation Ltd (SIFCL) from accepting public deposits and asked the central bank to give the company a fresh hearing. A bench of Justice Arijit Pasayat and Justice P.P. Naolekar also said a stay the Allahabad High court gave last week on the RBI directive will not be in operation.

“Till the matter is disposed afresh by RBI, its order of June 4 will not be given effect and at the same time interim protection granted to Sahara India Financial Corporation by the high court shall not be operative,” it said.

“Since the entire matter has been disposed of by this court, there will be no need for the high court to deal with the matter,” the bench said.

SIFCL officials will now have to appear before RBI June 12 for a personal hearing.

RBI had approached the Supreme Court June 6, challenging the high court stay on its order banning the Sahara group’s para-banking company from taking fresh deposits.

The apex court bench said: “In view of peculiar facts involved in the matter, RBI should give opportunity to SIFCL for personal hearing.”

The company had contended that it was not given a fair opportunity to express its response on the RBI show-cause notice.

It has argued that the interests of a large number of depositors are involved and that its 700,000 employees and field agents too would be affected.

SIFCL, based at Lucknow, is one of the biggest non-banking finance companies and has 42.5 million customers and 1,508 service centres. The Sahara group has interests in financial services, entertainment, real estate and sports.

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