The Reserve Bank of India on Monday said it had cancelled the licence of Sahara India Financial Corporation Ltd, the Sahara group’s non-banking financial company, effective September 3.

In June 2008, the central bank had banned the finance company from accepting deposits.

The regulator’s action comes seven months after the Securities and Exchange Board of India cancelled the licence of the group’s mutual fund arm, Sahara Asset Management Company, saying the entity wasn’t “fit and proper” to conduct the mutual fund business.

“Following the cancellation of registration certificate, the company cannot transact the business of a non-banking financial institution, as laid down under clause (a) of section 45-I of the Reserve Bank of India Act, 1934,” RBI stated.

The NBFC was registered on December 1998, with an office in Lucknow.

During its investigations, RBI had found SIFCL had continuously flouted know-your-customer norms, as well as those relating to asset-liability management and investments.

Besides prohibiting it from taking deposits, RBI has directed the Sahara group entity to repay the money as and when the deposits mature. SIFCL has also been asked to lodge all securities with the designated bank for custody.

Image: This file photo shows Sahara chief Subrata Roy talking to a staff. Photograph: Reuters