Subrata Roy, the chairman of the Sahara Group who died on Tuesday at the age of 75, had a string of run-ins with the country's financial regulators.

He ran afoul of the Reserve Bank of India (RBI) in the mid-2000s, when it began cracking down on residual non-banking financial businesses (RNBCs). Sahara India Financial Corporation (SIFCL), headquartered in Lucknow, was one of the two largest RNBCs at the time, along with the Kolkata-based Peerless Group. RNBCs were permitted by the RBI's licensing requirements to accept public deposits but not to lend against assets. They were, however, permitted to make discretionary investments. In reality, the RBI felt uneasy with the RNBCs' previous manner of doing business. As the two RNBCs held 80% of public deposits in the non-banking sector, systemic risk was rising in the financial industry.

The RBI issued a spate of restrictions restricting discretionary investments beginning in 2005. It also mandated that RNBCs invest 100% of their deposits in government bonds and bank deposits. The interest rates on such approved securities were low.

The noose against Sahara's RNBC company was already tightening. The RBI prohibited SIFCL from accepting new public deposits as early as 2008. The RBI acted on depositors' complaints about interest and principal payments being late. The examination by the RBI also discovered violations of know-your-customer and investment requirements. Asset-liability management was also a problem. At the time, SIFCL had a massive deposit base of Rs 20,000 crore from small depositors.

Roy, who had amassed a sizable commercial empire by this point, was not one to give in quickly. So, when the ban was imposed, he employed all of his resources to contest the RBI order. He also had political clout. The case was even taken to the Supreme Court, following which the RBI granted some relief by establishing a glide path. The RBI set a deadline for SIFCL to repay all deposits by the end of seven years, or by June 2015, and has permitted the company to accept new deposits with maturities of up to three years.

At the time, three Sahara Group businesses were registered with the RBI: the flagship SIFCL, an RNBC; Sahara India Corp Investment Ltd. (SICIL), an NBFC; and Sahara India Infrastructural Development Ltd. (SIIDL).

The RBI barred SIFCL from accepting deposits, while the other two were barred from doing so due bank licencing requirements. In reality, SIICL was also investigated by the RBI. SIICL voluntarily exited the NBFC sector in 2008.

The prohibition had a significant influence on the group. Roy was starving for money for his other ventures. Indeed, the RBI discovered that the group was accepting deposits under the names Sahara Pariwar and Sahara India Pariwar. The RBI was forced to issue a public warning to investors in 2011 about money received in the names of these two firms. The RBI made it clear to the public that these two firms were not permitted to receive public deposits.

Other regulators quickly stepped in as the group discovered new ways to raise funds. The Reserve Bank of India (RBI) intended to join the legal battle between Sahara and the Securities and Exchange Board of India (Sebi) in February 2015. The RBI requested that the Supreme Court block SIFCL from selling assets in order to free Roy by paying a penalty to another regulator, Sebi. The RBI stated that SIFCL was required by the RNBC framework to repay depositors and that the funds should not be used for any other purpose.

Finally, in 2019, the RBI filed a winding-up case against SIFCL in the Allahabad High Court, bringing the two's protracted legal battle to a close.