Almost five years after the Supreme Court ordered the SEBI to refund more than ₹40,000 crore to individuals that had invested money in two Sahara Group entities, the capital markets regulator has been able to refund only ₹85.02 crore.
In the latest annual report for the year 2016-17, the Securities and Exchange Board of India has stated that as on March 31, 2017, it received 14,295 applications involving 41,161 accounts while it made refunds with respect to 11,283 applications involving 30,398 accounts for an aggregate amount of ₹85.02 crore, including an interest component of ₹38.05 crore.
The regulator initiated the process of refunding investors in May 2013 by uploading the format on its website. It followed it up with two advertisements, in August and December 2014, asking investors to submit their claims with the required documents.
In 2011, SEBI passed an order against the two unlisted entities — Sahara India Real Estate Corporation and Sahara India Housing Corporation — that had issued optional fully convertible debentures (OFCDs) in 2008 to about 30 million investors collecting about ₹25,000 crore. The regulator directed the entities to refund the investors along with interest.
The SEBI order directing the two entities to refund investors was challenged by the companies and the matter went up to the Supreme Court that upheld the regulatory directions. The apex court directed the companies to deposit the money with SEBI, which was ordered to manage the refund process.
Persons familiar with the matter said that the process of verifying authenticity of claims has delayed the process. This is significant as the total number of investors as stated by the companies was always being looked upon with suspicion by regulatory officials and even the courts.
‘No authenticity’
The Supreme Court had also once remarked that there was no authenticity in the claims of the Sahara Group that it repaid 95% of its investors in cash.
J.N. Gupta, MD, Stakeholders Empowerment Services, a proxy advisory firm, said that the fact that the regulator had been able to refund only a limited amount brings to the fore the issue of “ghost investors” that had plagued the case from the beginning.
“This very clearly proves the doubt that the Supreme Court had that the numbers do not reflect the true picture,” said Mr. Gupta, a former SEBI executive director. An email query sent to SEBI remained unanswered.
The regulator has also stated in its annual report that about 596 applications involving 2,201 accounts have been referred back to applicants due to discrepancies while 172 applications involving 2,419 accounts fell in the disputed category.
As per the apex court's direction, SEBI's actions in the matter are being overseen by former Supreme Court judge B.N. Agrawal.
As on March 31, the aggregate amount that SEBI had for refunds to genuine investors stood at ₹14,487 crore. This included ₹11,800 crore recovered from Sahara and the interest earned on it after providing for refunds to genuine investors.
