The company’s announcement in the media last week follows a fresh order by the Reserve Bank of India, asking it to bring down its aggregate liability to zero by 30 June 2015 and repay its depositors on maturity

A recent announcement by Sahara India Financial Corporation Limited (SIFCL) that it would repay its total liabilities by December 2011, four years ahead of the deadline, has come under the scanner of the Reserve Bank of India (RBI). According to sources, the apex bank is examining the company's claim and the legitimacy of the announcement that was published in the media last week.

The advertisement has set off a discussion on whether the RBI should formulate rules about disclosures in advertisements issued by regulated entities. For instance, this particular Sahara advertisement does not have the logo of the company and the signatory has been identified only by the designation.

Its claims of deposits of Rs73,000 crore till June 2011, conveys the impression that it will repay this stupendous volume four years ahead of the due date and this conveys a false and misleading impression of the financial strength of the company.

A Mumbai-based chartered accountant and social activist thinks that regulators like the RBI and the Securities and Exchange Board of India (SEBI) should have strict rules about the format for such financial advertisements. "There should be more transparency such as the name and the signature of company officials, mention whether the entity is a company as per the Companies Act or whether it is an NBFC or a residual NBFC," he explained.

It is reliably learnt that the company's total liability is around Rs5,000 crore. But even this may not be a cash repayment, and may well be a transfer of deposits to another entity.

Sources, requesting anonymity, said that at this juncture the RBI is examining the company's claim about repaying its total liabilities. The central bank is also looking into the trail of the deposits as well as the authenticity of the print advertisement.

In 2008, the RBI had directed SIFCL, which is a residual non-banking finance company, not to accept any deposits and to repay the depositors on maturity, after it found that the company was not complying with the rules and regulations that are laid down for this activity.

The company, however, challenged the directive of the RBI and the matter went up to the Supreme Court, which asked the apex bank to provide SIFCL a personal hearing and make a fresh order.

Subsequently, the RBI issued a fresh directive to SIFCL, asking the company to bring down its aggregate liability to depositors to zero by 30 June 2015 and repay its depositors on maturity.

SIFCL asked depositors (through the advertisement) to contact its service centres to receive repayments.

An e-mail message to SIFCL requesting details about the repayment procedure, its call centre and the total liability that has to be repaid, was not answered till the time of publishing this report.

In June this year, SEBI also restrained two other entities of the Sahara group, Sahara Commodity Services Corporation (earlier known as Sahara India Real Estate Corporation) and Sahara Housing Investment Corporation, from accessing the securities market to raise funds till payments are made to the satisfaction of the market regulator. It directed these entities to return the money collected from millions of investors through an instrument named Optionally Fully Convertible Debentures (OFCD), citing violation of regulatory norms. The company has appealed against the SEBI order which is being heard before the Securities Appellate Tribunal.