The death of Subrata Roy, the founder-chairman of Sahara Group, has brought renewed focus on the approximately Rs 25,000 crore ($3.1 billion) in undistributed funds held by the Securities and Exchange Board of India (SEBI). Roy passed away on Tuesday at the age of 75. Under his leadership, Sahara Group became a major Indian conglomerate and was once recognized by Time magazine as the country’s second-largest employer.
The Supreme Court of India had directed two Sahara companies in 2011 to refund investors who had bought Optionally Fully Convertible Debentures (OFCDs) that were issued in violation of regulations. This decision was upheld in 2012, and it was affirmed that Sahara must deposit Rs 24,000 crore with SEBI for the reimbursement of investors over an 11-year period.
Despite Sahara’s claims that it had directly refunded over 95% of its investors, SEBI has only disbursed Rs 138.07 crore to claimants from 2012 to 2023. The undistributed refunds have contributed to the balances in the SEBI-Sahara accounts exceeding Rs 25,000 crore. In August this year, following a Supreme Court order, the Indian government commenced a refund process for Rs 5,000 crore to depositors trapped in four of Sahara Group’s cooperative societies.
The Centre launched the CRCS-Sahara Refund Portal to facilitate these refunds. Nearly 18 lakh depositors have registered on the portal, with the government pledging to return their money within nine months.
Sahara has accused SEBI of unjustly withholding its funds and obstructing economic progress. The group requested the return of its money after alleging there were no remaining claimants post-July 2018. However, by March 2023, SEBI had only refunded Rs 7 lakh out of the Rs 15,647 crore recovered from Sahara, even though the funds grew by Rs 1,087 crore in FY 2022-23 due to interest accruals.
The saga surrounding Sahara Group and its refund issues with SEBI has been long-standing and complex. With Roy’s passing and the large sums still held by SEBI, scrutiny over these funds and their rightful disbursement is expected to intensify.
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