1. Use Subrata Roy led Sahara group money to pay other hapless investors since Sebi cannot find original depositors

Use Subrata Roy led Sahara group money to pay other hapless investors since Sebi cannot find original depositors

Given how tough the Supreme Court (SC) has been with Sahara chairman Subroto Roy, chances are it will recover all the money it has asked the group to pay since the alternative is for Roy to go back to prison.

By: | Published: July 12, 2017 5:41 AM
subrata roy, subrata roy news, sahara group, subrata roy sahara, sebi, market, market news Sahara chairman Subroto Roy (Reuters)

Given how tough the Supreme Court (SC) has been with Sahara chairman Subroto Roy, chances are it will recover all the money it has asked the group to pay since the alternative is for Roy to go back to prison. Last week, SC gave Roy 15 days in which to deposit Rs 552 crore, failing which it would order the commencement of the auction process of Aamby Valley. The problem, however, as Mint points out, is that while Sahara may pay up all the money it collected from investors—two Sahara group firms had collected Rs 24,000 crore from 30 million investors—it is proving impossible to find these investors. According to Mint, while Sahara has already deposited Rs 11,798 crore so far—this has risen to Rs 14,487 crore thanks to the interest that has accrued on it—Sebi has managed to refund a mere Rs 85 crore to investors till the end of FY17; in FY15, a total of Rs 42 crore was repaid and this rose to Rs 55 crore according to Sebi’s annual report for FY16. Under the circumstances, presumably the government will have to start investigating whether the deposits were, in fact, benami.

While doing so, the government should consider the possibility of using this money for repaying lakhs of investors who have lost their money in various dubious investment schemes such as Saradha and Rose Valley. Under normal circumstances, this cannot be done since the Sahara money has to be kept in an escrow account on the off-chance that a depositor, or an heir, turns up and claims the funds several decades later. But the government had, in the Companies Act, envisaged the possibility of investors not turning up to collect their dues. So, while companies are supposed to open ‘unpaid dividend accounts’ to deposit unclaimed dues, after a period of seven years of remaining unclaimed, these are to be transferred to the Investor Education and Protection Fund (IEPF) run by the central government—apart from unclaimed dividends, even unclaimed shares are to be transferred to this account.

While the IEPF is meant to pay for class action suits and other such expenses like investor education that is meant for the larger body of investors, if the amount in it gets truly large, chances are it will remain unutilised for the most part. In which case, the government must consider changing the law to say that, if seven years after money has accrued to (IEPF)—that is, after it has remained unclaimed for 14 years—it will be transferred to stranded investors on a pro rata basis; if there are investors with claims of Rs 500,000 crore and the fund has Rs 50,000 crore, each investor will get a tenth of their claims. Indeed, since the IEPF only applies to, right now, listed companies, an amendment should be made to include all investors including those in collective investment schemes such as Saradha. The way things are, right now, if the government is able to prove the deposits were benami, it will seize them—but rather than just seizing them and transferring the money to the general exchequer, it would be more meaningful if lakhs of small investors were able to get back some part of their life savings.

  1. S
    Sachin Sharma
    Jul 13, 2017 at 7:39 am
    ALL MONEY HAS BEEN GIVEN As maturity amount.why this harrassment
    Reply
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    mukul dutta
    Jul 12, 2017 at 9:56 pm
    financial express are not liable to make such kind research when the case is going on sc. I think this is a plan of sebi to forfeited drama of poor public money. this is a full team work of media ,modi,sebi,sc. all. it is very disgusting matter to finish sahara planfully.very unfortunate to india where unemployment problem is growing by modi day by day.
    Reply
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    mukul dutta
    Jul 12, 2017 at 7:38 pm
    sebi is not verifying any investors not to refund any to poor investors now doing drama to forfit the money of poors and accommodate to give modi fund.is this a judgement. from very beginning the case is going on a wrong way, not refunding sahara and now after receiving money no verification done by sebi. either they refund or if unable refund all to sahara. sebi is not giving white paper. now it is clear they are telling false from beginning and sahara is right. but sc. not realizing the politics of sebi or not to realise what ever. but it is sure in this politics lakhs of poor will die or suisite in future.
    Reply
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    Naseem Ahmed
    Jul 12, 2017 at 4:40 pm
    A depositor of Sahara India, wants to claim to SEBI, But how can it be claim to Sebi Please previde the address to whome the customers will claim and how ,also the contact no of SEBI
    Reply
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    Vamsi Krishna Tunuguntla
    Jul 12, 2017 at 3:01 pm
    IN OUR CITY MANY OF PEOPLE OR DEPOSITERS R NOT GETTING SAHARA AMOUNT EVEN AFTER THE MATURITY DATE AND IF ANY ONE ASKING THE SAHARA STAFF THEY R TELLING TO CONVERT THE AMOUNT IN TO FIXED DEPOSITS FOR 1 YEAR TO 16 MONTHS.
    Reply
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    Narendra M Apte
    Jul 12, 2017 at 9:30 am
    It is often said that public memory is short that should not be the case of ‘Financial Express’. I wish to remind the FE team of loss incurred by the investors of Unit Trust of India. UTI was the first Mutual Fund in India and its US 64 Scheme was very popular among lakhs of small investors, many of whom were from middle class and from lower middle class. When the scheme was wound up by the Central government, all those who had invested incurred huge losses and till now no one has even bothered to compensate them. I believe if at all the unclaimed money of the Sahara group debenture-holders is to be used for a good purpose, investors of US 64 deserve to be considered for compensatory relief. Similarly those who had invested in health insurance scheme of UTI (Senior Citizens’ Benefit Scheme), which too was wound up have also suffered a loss. They too deserve compensatory relief.
    Reply
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