Sahara Group chairman Subrata Roy, who passed away on Tuesday, had a long history of a tussle with the Securities and Exchange Board of India (Sebi) and his demise has brought into focus once again the issue of refunds to nearly 30 million individual investors wherein the amount at stake is more than Rs 25,000 crore.
This assumes significance as the late founder of the Sahara Group repeatedly alleged that the capital markets regulator has not done enough to refund the investors of the company even after the business house deposited around Rs 24,000 crore with the regulatory body.
According to the regulator’s own disclosures, it has made refunds totalling only around Rs 138 crore as on March 31 even though the amount earmarked for refunds to the investors was pegged at a whopping Rs 25,163 crore—including the accrued interest—as on March 31.
The roots of the matter go back to 2011 when Sebi ordered two Sahara group entities—Sahara India Real Estate Corporation Ltd (SIREL) and Sahara Housing Investment Corporation Ltd (SHICL)—to refund the money that the companies raised from nearly 30 million individual investors through instruments known as Optionally Fully Convertible Bonds (OFCDs).
The Sebi order was the culmination of a long investigation based on which the regulator concluded that the two Sahara group entities violated various regulations while raising money from a large number of investors.
The matter finally reached the Supreme Court, which ruled in August 2012 that Sebi was right in directing the firms to refund the investors and ordered the two Sahara entities to deposit the money with the regulatory body that would manage the refund process.
Thereafter, Sebi formed a Special Enforcement Cell to execute the directions of the Supreme Court and called for investors to submit claims with respect to their investments made in the bonds issued by SIREL and SHICL.
Interestingly, Sebi has said that till March 31, 2023, it received less than 20,000 applications and refunds were made to a little over 17,500 applications. More importantly, it said that the remaining applications were closed.
“As on March 31, 2023, SEBI has received 19,650 applications involving 53,687 accounts. Refunds have been made with respect to 17,526 applications involving 48,326 accounts for an aggregate amount of Rs 138.07 crore including the interest amount of Rs 67.98 crore. The remaining applications were closed either due to their records not being traceable in the documents/data provided by SIRECL and SHCIL or on account of no response received from the bondholders on the queries raised by SEBI,” stated the Sebi annual report for the year 2022-23.
The capital market regulator has further stated that there has been no change in status of refunds from the year 2021-22, since it is awaiting further directions from the Supreme Court and it has filed as many as 23 status reports till March 31.
Also Read: Former Sahara Group chairman Subrata Roy’s run-ins with the RBI