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UP does U-turn over Sahara para-banking arm

LUCKNOW: Making a U-turn, the Uttar Pradesh Government has withdrawn a letter sent to the Reserve Bank of India seeking an explanation on steps taken to protect the interests of investors of Sahara Group’s para-banking arm SIFCL.

Expressing dissatisfaction with RBI’s action on SIFCL, including a ban on the company from accepting fresh deposits, the State Government had said that the central bank had not even “prohibited SIFCL from alienating its assets”.

“In the absence of such a prohibition, depositors will have serious apprehension about the possible alienation of assets, jeopardising the security of their deposits,” Chief Secretary Atul Kumar Gupta had written on June 4.

The Uttar Pradesh Government’s decision now to rescind comes hot on the heels of a meeting between Samajwadi Party president Mulayam Singh and Chief Minister Mayawati at her residence here on Friday.

The Mayawati-Mulayam meeting, taking place after a gap of 13 long years, has triggered widespread speculation here ahead of the general elections.

In its fresh letter to the RBI dated June 6, the UP Government said: “On reconsideration of the matter, the State Government is of the view that RBI is the competent authority to take a final decision in the matter....”

“In view of the above, my earlier letter.... be treated as withdrawn. The bank may take all further necessary actions as it may deem fit and proper,” Mr. Gupta wrote.

The State Government had earlier also expressed fear that a law and order problem might arise from the ban. While Sahara secured a stay on the RBI order from the Allahabad High Court, the central bank has moved the Supreme Court challenging the High Court injunction. - PTI

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