UP govt backs out of Sahara India issue, CS withdraws letter

Lucknow, June 7 (UNI) In what can be called an interesting turn of events, Uttar Pradesh government has withdrawn the letter sent to Reserve Bank of India (RBI) in connection with the latter's order against Sahara India Financial Limited (SIFL) putting ban on further deposits.

UP chief secretary Atul Kumar Gupta, in the light of RBI's order, had written to the latter on June 4 asking it to ensure the interests of the depositors is protected.

''On reconsideration of the matter, the state government is of the view that RBI is the competent authority to take final decision in the matter as it is alone in the know of full and complete facts,'' Mr Gupta had said in his fresh letter dated June 6 to RBI Executive Director G Gopal Krishnan.

The UP chief secretary said his earlier letter should be treated as withdrawn.

Significantly, the letter was sent on the same day when Chief Minister Mayawati had met Samajwadi Party President Mulayam Singh Yadav, who is considered very close to Sahara India group Chairman Subrato Roy.

Meawnhile, the Additional Director General of Police (ADG), Law and Order , UP Brij Lal has also sent a letter to local RBI office in response to his request about seeking adequate police force to protect RBI establishments in the eventuality of any violent reactions from Sahara depositors. '' ...Proper directions were issued to all concerned authorities to ensure maintenance of law and order in and around all premises/establishments of RBI and to provide adequate police force in this regard,'' the ADG letter stated.

In a rather strong-worded letter, the UP chief secretary Atul Kumar Gupta had written on June 4 to RBI Executive Director G Gopal Krishnan had the order did not even prohibit SIFCL from alienating its assets, which RBI is empowered by section 45 MB(2).''....even though the RBI order has been passed to protect the interests of the depositors, it is not doing enough.'' The UP Chief Secreatry had also asked in his earlier letter that ''it appears imperative that RBI clarifies to the depositors at large how the interests of the depositors are being protected and what the RBI will be doing to ensure it.'' In its response, Sahara India Finance, the Lucknow-based residuary non-banking company, one of the country's biggest deposit-taking NBFCs, has termed the RBI order as ''legally unsound, wanting in prudence and application of mind''.

The company also said it will soon initiate a legal challenge.

Meanwhile, the Allahabad High Court had stayed the order of the RBI till further orders.

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