Sahara co-op society not under us: RBI

Investors' group writes to RBI governor says any society with capital exceeding Rs 1 lakh and mobilising deposits should be regulated by RBI

The Reserve Bank of India (RBI) has said it does not regulate or supervise the affairs of Sahara Credit Co-operative Society. The central bank’s statement came in response to a complaint filed by a Mumbai-based investors’ group, Investors and Consumer Guidance Society, (ICGS). The group has challenged the statement and has written to the RBI governor and the central government on the provisions under which the cooperative society must seek an RBI licence.

“The fact that they have not registered as an urban co-operative bank (UCB) cannot be used as an excuse to not look into their matters. They are collecting deposits from millions of investors. According to rules in force, any society whose capital and reserves exceed Rs 1 lakh and mobilising deposits, is bound to be regulated by RBI,” a senior official of ICGS said.

Late last year, ICGS had written to RBI alleging the group was mobilising deposits without going through the regulatory rigours of any central agency. “Sahara Group is now collecting deposits in the name of Sahara Credit Co-operative Society Ltd under three schemes, namely Sahara “A” Select, Sahara U Golden and Sahara E Shine,” the society said in its complaint. “If all other companies have to go through the rigours of RBI, Sebi, ROC, etc, we have this group which is not regulated by any agency,” it added.

In an e-mail response to the complaint, a senior RBI official said, “It is observed that your complaint pertains to the functioning of Sahara Credit Co-operative Society Ltd., which is a co-operative credit society. We advise that Reserve Bank of India (Urban Banks Department) does not regulate and/or supervise the functioning of co-operative credit societies.”

Sahara group officials were not available for comment. An email to the group spokesperson did not elicit any response.

The investor group, however, has challenged this statement, writing to the department of agriculture and cooperation under the ministry of agriculture. In the letter addressed to the RBI governor, ICGS said, “Since they have collected crores already, they are an UCB. Have they applied for or taken a licence from RBI? If not, it is RBI’s duty to immediately ask the Sahara Credit Co-operative Society to immediately stop deposit mobilisation and refund depositors.”

The Lucknow-based Sahara Credit Co-operative Society was developed by around 3,800 workers of the Sahara group, the group spokesperson had told Business Standard last year. The co-operative came into being close on the heels of the market regulator taking action against a couple of group companies raising money for real estate projects. “The cooperative is running some schemes which are towards financial inclusion of un-bankable people in rural and a semi-urban areas who do not go to bank and the bank does not come to them. Media should support through their columns such endeavours as a co-operative movement,” the spokesperson had then said.