Sebi gets flooded with Sahara refund claims

Sebi says it will directly transfer the refund money to the bank accounts of genuine investors

In the high-profile Sahara case involving refund of over Rs 24,000 crore (Rs 240 billion) to investors, market regulator Securities and Exchange Board of India (Sebi) has a new problem at hand -- handling the huge volumes of refund claims with majority of these lacking necessary documents or details.

Since Sebi began the process last month of refund of money to genuine Sahara investors, the regulator has been flooded with applications for such repayments.

However, most of these claims are not supported by necessary details and documents, sources familiar with the situation said.

The details missing in most of the applications include bank account details of the refund claimants, as also proof of their addresses. Besides, the PAN details are also missing in a large number of applications.

While PAN details are not mandatory for the refund, except in cases where the applicants are claiming exemption from deduction of tax at source, bank accounts are necessary for all the investors seeking refund.

Sebi has said it would directly transfer the refund money to the bank accounts of genuine investors and they cannot get the money without having a bank account. For tax exemptions, the applicants are required to provide additional details in a prescribed format, giving details of their other income and investments.

Without disclosing the exact numbers, a senior official said most of the claims received so far are for amounts worth a few thousand rupees, although there are also some duplicate claims with applications being made by different people with the same investment details.

Two Sahara group firms, Sahara Housing Investment Corporation Ltd (SHICL) and Sahara India Real Estate Corp Ltd (SIRECL), were asked by the Supreme Court to refund more than Rs 24,000 crore raised by them from an estimated three crore investors through issuance of certain bonds.

Sebi, which had charged the two firms with having raised these funds through various illegalities, was asked by the Supreme Court to facilitate the refund after ascertaining the genuineness of the investors. However, Sahara group deposited only Rs 5,120 crore with Sebi and claimed it has already refunded more than Rs 20,000 crore directly to the investors.

Last month, the Supreme Court told Sebi to begin refunding the money to genuine investors out of the Rs 5,120 crore deposited with it, while the matter would be heard further by the apex court next month. Besides consulting the investor details submitted to it by the Saharas, Sebi has also invited direct applications from investors for such refunds.

However, Sebi has decided to hold back the refund in cases where the names of multiple investors have come to light, pending a direction from the Supreme Court in this regard.