Indian Shadow Banker Sahara Group Seeks a License

Subrata Roy built an empire as a shadow banker, operating at the edges of India’s regulated financial system. Companies in his Sahara group take deposits from and lend money to mostly poor Indians. Now Roy wants to step into the light: He’s applying for a license to open a conventional bank.

Getting approval may be hard for Roy, who’s had run-ins with the Reserve Bank of India—the nation’s central bank—and the Securities and Exchange Board of India (SEBI). Unless the regulators give him a clean bill of health, Sahara “will never make it past the first round of screening,” says Vishal Narnolia, an analyst with SMC Global Securities in Mumbai. “There are many other contenders with better credentials.”