Uttar Pradesh withdraws letter to RBI on Sahara

June 7th, 2008 - 9:59 pm ICT by IANS  

Lucknow, June 7 (IANS) The Uttar Pradesh government has withdrawn a letter to the Reserve Bank of India (RBI), seeking to know how the central bank would protect the interests of depositors of the Lucknow-based Sahara India Financial Corporation (SIFC). The June 4 letter was in response to a ban the RBI had imposed on the non-banking financial company (NBFC) against accepting any public deposits.

Uttar Pradesh Chief Secretary Atul Kumar Gupta wrote to RBI executive director G. Gopala Krishan seeking his clarification, fearing a law and order fallout of the ban if there was a run on the SIFC offices.

However, in another letter Friday night, the state government withdrew the June 4 communique, stating: “The RBI is a competent authority to take the final decision since it alone was aware of the circumstances leading to the ban.”

The government’s move came after the Lucknow bench of the Allahabad High Court Thursday stayed the RBI ban and the central bank Friday moved the Supreme Court against the stay order.

The RBI had Wednesday banned the Sahara group firm from accepting any public deposit with immediate effect, blaming it of violating various rules governing NBFCs.

The regulator asked the firm to notify all its agents and employees not to accept any deposits as well as to paste a copy of the directive prominently at all its offices.

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