Reserve Bank of India is too late in taking action against Sahara Financial Group – the parallel between Sahara and Bear Sterns fiasco
Balaji Reddy
Jun. 8, 2008

The tussle between Indian central Bank RBI (Reserve bank of India) and questionable banking entity Sahara India Financial Corp is taking a nasty turn. The blame has to go to the Indian Finance Ministry and the Reserve Bank of India. They watched the fiasco of Sahara blatantly violating the guidelines for investing deposits and the reserves guidelines putting money of common people of India on risk. They did nothing for moths –years.

Sahara is now fighting back against the orders of RBI. The RBI should not have allowed Sahara to operate in the first place. Sahara has accumulated interests ranging from media to real-estate development to finance. Thursday it received a stay on the central bank's order from the high court.

The problem now lies with the money of the common people in India. Sahara may not be able to return the money to its depositors. That will be a run on the bank. Will India have $4 billion to save a bank like Mr. Bernanke, the academic Fed Chairman (formerly a Princeton University Professor) did in saving bear Sterns in America?

Sahara and Bear Sterns both did the same mistake. They decided to gamble with others money. There is one little difference. Americans allowed Bear Sterns to operate under zero guidelines. Reserve Bank of India allowed Sahara to operate by violation set guidelines.

Reserve Bank of India is too late in taking action against Sahara Financial Group – the parallel between Sahara and Bear Sterns fiasco
Balaji Reddy
Americans allowed Bear Sterns to operate under zero guidelines. Reserve Bank of India allowed Sahara to operate by violating set guidelines.
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