SEBI holds Rs. 25,000 crore of Subrata Roy's Sahara Group
The demise of Sahara Group's founder-chairman, Subrata Roy (75), on Tuesday, has brought attention to the conglomerate's undistributed Rs. 25,000 crore held by the Securities and Exchange Board of India (SEBI). As ordered by the Supreme Court in 2012, Sahara Group deposited Rs. 24,000cr with the SEBI so its three crore investors are refunded amid allegations of running Ponzi schemes. However, the capital markets regulator refunded only Rs. 138cr in 11 years while the deposited amount grew with interest accrued.
Why does this story matter?
Roy's group companies faced numerous regulatory and legal challenges for allegedly bypassing regulations with Ponzi schemes. Notably, Time magazine once hailed Sahara Group as India's second-largest employer after the Indian Railways. In 2021, the group claimed the SEBI was unreasonably holding its funds and impeding the country's economic growth. It asked the SEBI to return the money, citing an advertisement by the regulator saying it wouldn't entertain any claims after July 2018, indicating no claimant was remaining to be paid.
SC upheld SEBI's order to Sahara Group in 2012
In 2011, the SEBI directed two Sahara Group companies, Sahara India Real Estate Corporation Limited (SIREL) and Sahara Housing Investment Corporation Limited (SHICL), to reimburse its investors for funds raised through Optionally Fully Convertible Bonds (OFCDs). The regulator said that the funds were obtained in violation of its rules and regulations. The Supreme Court upheld the SEBI's decision in 2012, directing the firms to repay the money collected from investors along with 15% interest.
SEBI returned only Rs. 7 lakh in FY 2022-23
The Sahara Group deposited the funds in specially opened accounts of nationalized banks for the SEBI to reimburse investors while claiming it had already directly refunded over 95% of investors. Per the SEBI, until March 2023, it recovered nearly Rs. 15,647cr from the Sahara Group. Interestingly, during fiscal 2022-23, the deposited funds grew by Rs. 1,087 crore, while the SEBI refunded only Rs. 7 lakh to investors in the same period. The balance was Rs. 25,163 crore in March 2023.
Centre initiated refund process from Sahara-SEBI accounts
Meanwhile, in August 2023, following an SC order, the Centre initiated the process of refunding Rs. 5,000 crore from the Sahara-SEBI accounts to depositors whose funds are struck in the group's four cooperative societies. Cooperation Minister Amit Shah introduced the Central Registrar of Cooperative Societies (CRCS)-Sahara Refund Portal in July to expedite the reimbursement. Nearly 18 lakh depositors have registered on the portal. In March, the government declared that money would be returned to 10 crore investors within nine months.
