November 05, 2024 17:11 (IST)
Follow us:
facebook-white sharing button
twitter-white sharing button
instagram-white sharing button
youtube-white sharing button
Union Minister HD Kumaraswamy booked for threatening cop probing into mining case | Supreme Court upholds validity of Uttar Pradesh Madrasa Education Act | Not all private properties are community resources that govt can take over: Supreme Court | Pakistan's Lahore has become world's most polluted city with an AQI of 1900 on Sunday | Indian Army 'successfully completes' patrolling to a key point in Ladakh's Depsang region

SC unhappy over SEBI pace of verification in Sahara accounts

| | 08 Apr 2014, 12:56 am
New Delhi, Apr 7 (IBNS) The Supreme Court has expressed its displeasure over Securities and Exchange Board of India’s tardy pace in verifying investor accounts in Sahara’s optionally fully convertible debenture issue.

 

While hearing the ongoing case between Sahara Group and SEBI on Apr 3, the apex court observed that the market regulator had failed to make much progress in verifying investors in the issue.

SEBI has demanding an additional 20,000 crore rupees from Sahara for repayment to investors. 
 
On the other hand, Sahara says it has already paid approximately 23,500 crore rupees or 93% to investors in the OFCD - issued by Sahara India Real Estate Corporation and Sahara Housing and Investment Corporation Limited - against the total outstanding of around 25,800 crore rupees. 
 
It has also submitted all required proof including original receipts, forms, KYC details, and vouchers with SEBI for verification.

During the April 3 hearing, Sahara asked the court to direct SEBI to start and conclude the verification process of investors in the company’s OFCD issue.

While SEBI has been claiming that investor accounts provided by Sahara are fictitious, the regulator’s independent verification has failed to make any headway. 
 
SEBI so far has been able to repay less than one crore rupees to OFCD investors even though Sahara had deposited 5,120 crore rupees with market watchdog almost 18 months ago.

Interestingly, in 2008, Sahara had paid back around 4 crore depositors under strict supervision of Reserve Bank of India. The central bank then did not stumble upon any fictitious account. The OFCD issue had almost same set of investors.

Even as SEBI looks for, what it calls, genuine investors in the issue, the process adopted by it to track them is patchy and unlikely to help much. 
 
The form for Sahara investors on SEBI’s website is ‘Application for Refund’ and not ‘Application for Investor’s Verification.’ 
 
Hence, the forms are only for those investors who have not got refund from Sahara so far and need to be paid back.
 
There is no process put in place by SEBI till now for verification of those investors who have got their investment. This require special attention as majority of investors have already got their refund, as claimed by Sahara. If that is indeed the case, then why would investors fill such forms running into numerous pages.

Further, most of the investors in Sahara’s OFCD issue reside in rural and semi-urban areas with hardly any access to computer and internet. 
 
Assuming that Sahara hasn’t paid back some of them, how can these investors have access to forms available on SEBI's website. 
 
The form itself is complex and needs substantial paperwork which again is a hindrance for small investors, who belong to rural and poor segment of society where literacy is low. Surprisingly, SEBI has asked those seeking refund to open a bank account for transfer of money.
 
A number of investors who put money in the OFCD issue do not have access to banking services so opening an account just for a refund will be a Herculean task.

While the apex court has been critical of Sahara with the company chief Subrata Roy and two directors in judicial custody for over a month now, it must also adopt a sterner approach towards SEBI for its lackadaisical attitude and inability to verify investors.  

Support Our Journalism

We cannot do without you.. your contribution supports unbiased journalism

IBNS is not driven by any ism- not wokeism, not racism, not skewed secularism, not hyper right-wing or left liberal ideals, nor by any hardline religious beliefs or hyper nationalism. We want to serve you good old objective news, as they are. We do not judge or preach. We let people decide for themselves. We only try to present factual and well-sourced news.

Support objective journalism for a small contribution.