The latest passing of Sahara Group’s leader, Subrata Roy, has reignited discussions on the staggering INR 25,000 crore in undistributed funds under SEBI’s stewardship. This substantial amount, a byproduct of regulatory confrontations stemming from alleged Ponzi schemes, adds intricacies to the financial narrative. The intricate tale involves SEBI’s directives, legal clashes, and pivotal Supreme Court decisions, weaving a saga entangled with financial regulations and the quest for investor reimbursements.
SEBI’s Edict and Sahara Group’s Legal StrugglesÂ
In 2011, SEBI ordered Sahara India Real Estate Corporation Ltd. and Sahara Housing Investment Corporation Ltd. to recompense funds acquired through Optionally Fully Convertible Bonds, quoting regulatory breaches. After prolonged legal disputes, the Supreme Court, in 2012, validated SEBI’s decree, directing Sahara to sublimate roughly INR 24,000 crore for investor restitution. In spite of Sahara’s assertion of directly repaying over 95% of investors, SEBI’s latest annual report discloses only INR 138.07 crore spread over 11 years to investors of the two Sahara entities.
Escalation of Deposits and Lack of Claims
The earmarked bank accounts for reimbursements have swelled to over INR 25,000 crore, surpassing the mandated deposit. Notably, the last fiscal year witnessed only marginal increments in reimbursements, leaving a considerable surplus in SEBI-Sahara refund accounts. With a majority of bondholders from Sahara entities refraining from asserting claims, the total reimbursement amount experienced meager growth. SEBI’s annual report indicates that, as of March 31, 2023, 19,650 applications, entailing 53,687 accounts, resulted in reimbursements totaling INR 138.07 crore.
SEBI’s Retrieval and Deposits in Nationalized BanksÂ
Under Supreme Court directives and SEBI’s attachment orders, an aggregate of INR 15,646.68 crore has been recuperated by SEBI as of March 31, 2023. This recovered sum, coupled with accrued interest after eligible bondholder reimbursements, is lodged in nationalized banks, amounting to about INR 25,163 crore as of March 31, 2023. The consistent augmentation in deposited funds, outlined in SEBI’s recent annual reports, underscores the protracted nature of the reimbursement process and the complexities inherent in navigating the legal and financial terrain.
Historical Context and Endeavors for Fund RecoveryÂ
SEBI’s annual reports delineate the timeline of fund growth, evolving from INR 21,770.70 crore in 2020 to the present INR 25,163 crore. Concurrently, the government created measures to reimburse INR 5,000 crore to depositors in Sahara Group’s cooperative societies. The ‘CRCS-Sahara Refund Portal’ was introduced, registering 18 lakh depositors. A Supreme Court directive mandated the transfer of INR 5,000 crore from the Sahara-SEBI refund account to the Central Registrar of Cooperative Societies, marking a significant stride in the ongoing fund recovery process.
The death of Subrata Roy rekindles highlighting the intricate financial narrative involving SEBI and the Sahara Group. The unreleased funds, legal battles, and the nuanced reimbursement process underscore the challenges in resolving extensive financial imbalances. As the regulatory milieu evolves, the lingering question persists: How will the funds be equitably distributed, ensuring fairness for investors and adherence to financial regulations?
