RBI cancels Sahara India's para-banking license

In a fresh setback to the beleaguered Sahara India Pariwar, the Reserve Bank of India (RBI) has cancelled the license of its holding company Sahara India Financial Corporation Limited (SIFCL), officials said on Tuesday.

The action has been taken by the department of non-banking supervision of the RBI, in Kanpur.

The move comes in wake of several irregularities and ignoring financial rules and regulations by Sahara, an official further informed.

The notice cancelling its license to conduction financial business has been sent to the Kapurthala head quarter of the Sahara India.

The move is being seen as the 'final nail' in the fortunes of the once-fledgling company as the SIFCL was its core wing from which money was collected through small time subscribers and then routed to other wings such as media, real estate and others.

With its chairman Subrata Roy 'Sahara' already in jail for the past one year plus, the RBI action, many fear, could "break the financial spine" of the organisation.

Under the new order, the Sahara India would be barred from any sort of financial transactions.

The RBI had in 2008 barred the company from taking any deposits from the people under its chit fund operations.

Many depositors had since then complained to the RBI that they were not being paid back their money by Sahara, following which a probe was ordered by the bank.

A report of the investigations was sent to the RBI HQ in Mumbai last month after which the penal action of cancelling the license of SIFCL was taken.