Subrata Roy's and the Unresolved ₹25,000 Crore in SEBI

Subrata Roy, aged 75, passed away in Mumbai after a prolonged illness, reigniting focus on the significant amount of ₹25,000 crore lying dormant within the Securities and Exchange Board of India (SEBI)'s account.

In a directive issued earlier by the government, it was declared that the funds, belonging to four cooperative societies, would be reimbursed to nearly 10 crore investors within nine months. This proclamation followed a Supreme Court ruling that mandated the transfer of ₹5,000 crore from the Sahara-SEBI refund account to the Central Registrar of Cooperative Societies (CRCS).

Roy, the chief of Sahara Group, faced a series of legal and regulatory battles concerning his conglomerate's alleged involvement in circumventing regulations through Ponzi schemes—an accusation persistently refuted by his group.

The tussle commenced in 2011 when SEBI instructed two Sahara Group entities, Sahara India Real Estate Corporation Ltd (SIREL) and Sahara Housing Investment Corporation Ltd (SHICL), to reimburse funds garnered from nearly 3 crore investors via certain bonds (Optionally Fully Convertible Bonds - OFCDs), deeming the fundraising to be in contravention of regulations. After a protracted legal process, the Supreme Court in 2012 upheld SEBI's mandate, necessitating the two firms to refund the collected money, amounting to an estimated ₹24,000 crore, along with 15% interest. Sahara contended that they had already directly repaid over 95% of the investors.

SEBI's latest annual report reveals that over an 11-year period, refunds totalling ₹138.07 crore were disbursed to investors of the two Sahara Group firms. Despite this, the amount parked in dedicated bank accounts for reimbursements has swelled to exceed ₹25,000 crore. However, during the last fiscal year (2022-23), SEBI's refunds to bondholders of the Sahara companies increased by a meagre ₹7 lakh, while the balance in SEBI-Sahara refund accounts escalated by ₹1,087 crore.

According to SEBI's report, out of 19,650 applications encompassing 53,687 accounts as of March 31, 2023, refunds were facilitated for 17,526 applications covering 48,326 accounts, totalling ₹138.07 crore, including an interest component of ₹67.98 crore. Remaining applications were closed due to the absence of traceable records from the Sahara Group firms.

Moreover, SEBI disclosed that, as of March 31, 2023, it had retrieved an aggregate of ₹15,646.68 crore through Supreme Court orders and attachment orders. This sum, along with accrued interest, was deposited in nationalised banks pursuant to the Supreme Court's August 31, 2012 judgment, resulting in a total deposit of approximately ₹25,163 crore by March 31, 2023.
Additionally, the government initiated a refund process in August to reimburse ₹5,000 crore to depositors trapped in four Sahara Group cooperative societies. Earlier, Cooperation Minister Amit Shah launched the 'CRCS-Sahara Refund Portal' to expedite the return of funds to investors, with approximately 18 lakh depositors enlisted on the portal.

As the Founder's death is being mourned by his core team and close quarters, the general public has been reminded of the long drawn processes of the Indian system that often stretch beyond the life of the alleged scamster. While ofcourse this is a corporate fraud and the processes will continue till they find a fruitful closure, we at the informational end of the spectrum hope such reportage doesn't have to stretch beyond a certain tenure. Definitely not the lifetime of the accused nor the victims.