Prima facie financial institution test led to waiver of pre-deposit and stay of recovery for a microfinance trust.

A microfinance trust seeking admission of its appeal obtained waiver of pre-deposit and a stay on recovery because the Tribunal, on a prima facie view, was not satisfied that the activity fell within the statutory description of a financial institution under the Reserve Bank of India Act, 1934. The Tribunal also noted that comparable relief had been granted in a similar matter involving another trust. On that basis, it protected the appellant during the pendency of the appeal and waived the pre-deposit requirement for admission.

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Issues: Whether, at the stage of admission, the appellant had made out a prima facie case for waiver of pre-deposit and stay of recovery, having regard to the nature of its activity and the statutory definitions governing taxable banking and financial services.

Analysis: The appellant was a trust engaged in microfinance to self-help groups. The Tribunal noted, prima facie, that it was not convinced that the appellant answered the description of a financial institution, having regard to the definitions in the Reserve Bank of India Act, 1934. The Tribunal also took note that in a similar matter involving a comparable trust, relief had been granted. In that background, the Tribunal found it appropriate to waive pre-deposit for admission of the appeal and to protect the appellant from recovery during the pendency of the appeal.

Conclusion: Waiver of pre-deposit was granted and recovery was stayed during the pendency of the appeal.

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