Market watchdog Sebi has extended the deadline by one month for submission of bids by public sector banks and KYC Registration Agencies (KRAs) to conduct "in-person verification" of about three crore investors in the high-profile Sahara case to ascertain their genuineness.
The Securities and Exchange Board of India (Sebi) had floated a tender in this regard on November 2 and had earlier asked the public sector banks and KRAs to submit their applications by November 22.
However, Sebi has now decided to extend the deadline for bid submission to December 21 and would open the technical bids on the same day.
Earlier, the technical bids were scheduled to be opened on November 22, while a pre-bid meeting was held by Sebi with the interested parties on November 7.
The selected 'In-Person Verification (IPV) Agency' would be mandated to interact "face-to-face" with all investors in the Sahara case to ascertain their genuineness. Sebi has been mandated by the Supreme Court to facilitate refund of about Rs 24,000 crore with 15 per cent interest to the bondholders of two Sahara group firms after ascertaining their genuineness.
In its order dated August 31, the Supreme Court had asked Sebi to ascertain the genuineness of an estimated three crore bondholders of OFCDs (Optionally Fully Convertible Debentures) of two Sahara group companies (Sahara Housing Investment Corporation Ltd and Sahara Real Estate Corporation Ltd) and thereafter facilitate refund of the money with the interest.
In this regard, Sebi has decided to carry out in-person verification of these bondholders, for which it is seeking the services of public sector banks and KRAs.
The KRAs are authorised agencies to carry out KYC (Know Your Client) requirements for all the market entities, including brokerage firms and mutual funds.
The selected agency would have to meet the bondholders face to face to establish their existence, visit their given address to ascertain their residence proof and verify their original identity and address proofs vis-a-vis given details.
The IPV Agency would also have to get the copies of identity/address proofs signed by the bondholders and verify the documents related to investment in OFCDs vis-a-vis details provided by Sebi and its agencies.
Sebi is also in the process of appointing investigating agencies to assist it in this matter, while it is also hiring a Registrar and Transfer Agent (RTA) for investor data and payment processing related works in the case.
The RTA's job would involve scanning and verification of investor documents, setting up and managing of toll-free investor helpline and grievance redressal cell and processing of payments to the genuine investors.
Sebi begins prosecution proceedings against Sahara group
Market regulator Sebi has begun prosecution proceedings against two Sahara firms and their top officials, while accusing them of failing to provide documents related to three crore investors as per a Supreme Court order.
The prosecution proceedings have been launched against Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara Housing Investment Corporation Ltd (SHCIL), as also their promoter/directors -- Ashok Roy Choudhary, Ravi Shankar Dubey, Vandana Bhargava and Subrata Roy Sahara, Sebi said.
The market regulator further said that "as Saharas did not submit the documents as per the order dated August 31, 2012 of the Supreme Court, Sebi has filed contempt application before the Supreme Court."
While the Sahara Group spokesperson did not offer any comment on the Sebi move, the companies last week approached Securities Appellate Tribunal seeking time till January 31, 2013 for submission of documents.
The apex court had asked SIRECL and SHCIL to refund an estimated Rs 24,000 crore collected from about three crore investors, through red herring prospectuses (documents for raising public funds) in March 2008 and October 2009, along with 15 per cent annual interest to Sebi by November 30, 2012.
The Sahara companies were also asked to furnish within ten days all documents in their custody, particularly the application forms submitted by subscribers, the approval and allotment of bids and all other documents to Sebi so as to enable it to ascertain the genuineness of the subscribers as well as the amounts deposited.
The Supreme Court had also asked Sebi to identify the subscribers who had invested the money on the basis of the two RHPs and refund the amount to them with interest on their production of relevant documents providing payments and after counter-checking the records produced by Sahara firms.
Sebi further said in a public notice that it has been receiving "complaints from investors that they are being forced by Saharas/their agents/officials to switch-over their investments to other schemes in Sahara Group Companies like Sahara Q Shop Unique Products Range Ltd, Sahara Credit Cooporative Society Ltd, etc.
"Some investors have also complained that their investments have been switched over to the said schemes of Sahara Group Companies without their consent," Sebi said.
The regulator said that the act of any such person forcing the bondholders of SIRECL and SHCIL to switch over to other schemes of Sahara Group Companies "is not in accordance with the order of the Supreme Court".
Sebi has asked the bondholders to "hold on to the original documents relating to their investments in bonds and produce the same to Sebi when called for and not to yield to any pressure from any person, including Saharas or their agents for converting or switching over their existing investments in the bonds to any of their other schemes like Sahara Q-Shop."
The regulator has also asked investors to inform it about any pressure tactics in this regard.