RBI gives Sahara breathing space to wind up operations

The RBI has ordered that the aggregate liability to depositors (ALD) should not exceed Rs 15,000 crore as on June 30, 2009, Rs 12,600 crore as on June 30, 2010, and Rs 9,000 crore as on June 30, 2011. Sahara will have to repay the deposits as and when they mature and bring the ALD to zero on or before June 30, 2015.

SIFCL will also submit a comprehensive business plan before August 16, 2008. A statement issued by the central bank on Tuesday said RBI has incorporated in its order the offer made during the personal hearing by the managing worker & chairman and senior executives of SIFCL.

Keeping in view quality corporate governance, Sahara offered to reconstitute the board of directors of SIFCL within a period of 30 days from June 16, 2008 so that the board will consist of 50 per cent of independent directors acceptable to the RBI, get the appointment of these independent directors ratified at the AGM of the company and to continue the said arrangement till all depositors are repaid in full.

This apart, it will also appoint statutory auditors from the panel of auditors suggested by the RBI at the ensuing AGM of the company by August 31, 2008 and to continue to appoint statutory auditors each year from the panel suggested by the RBI till all depositors are repaid in full.

It may be recalled that the RBI had, by its order dated June 4, 2008, prohibited SIFCL from accepting deposits from the public and directed SIFCL, among other things, to repay the depositors on maturity and comply with the directions of RBI.

Other conditions imposed by RBI are SIFCL will not treat non-payment of installments under any running daily deposit or other recurring deposit schemes by depositors after June 30, 2011, as a default by depositor and SIFCL will be liable to pay the agreed rate of interest on the amounts actually held by it for the entire term of the deposit as if there was no default.