Sahara India Fixed Deposit Scheme: Plans And The Interest Rates

The Securities Appellate Tribunal upheld SEBI’s ruling on October 21, 2011 and directed to refund to refund Rs 24,000 crore with 15% interest to its nearly three crore investors the company mobilized through two of its associate companies, Sahara Housing Investment Corp and Sahara India Real Estate through an instrument named Optionally Fully Convertible Debentures (OFCD).

The Securities Appellate Tribunal (SAT) said that the issuing company withheld all the necessary information from its investors that is mandatory to be disclosed in every public issue.

Such concealment of facts is very significant and disobeys most of the statutory directives.

The affidavit of Sahara group shows that, Sahara Housing owes Rs 6,380.50 crore to 7.5 million investors and Sahara India Real Estate (now Sahara Commodity Services) owes Rs 19,400.87 crore to 22.1 million investors. The total liability on the date of SEBI order was around Rs 38,000 crore including interest of Rs 14000 crore.

These two Sahara groups of companies raised the money through private placement from nearly three crore investors.

A brief synopsis of a part of their Offer document reads as, ”the objective of the investment through the units offered is to generate regular income by investing the corpus of the fund into debt and money market securities normally matching with the time line of the scheme. However, the offer documents of these companies say, the scheme does not guarantee any guaranteed return.

It also states that, the scheme has been prepared in accordance with the SEBI Rules and guidelines. It has been placed to SEBI for approval. However, neither any approval has been received nor has it been disapproved (in simple word, it means the scheme was not approved by SEBI!) by SEBI on its adequacy and accuracy. As per disclosure, the offer document will remain effective until some material changes occur and such changes are approved by SEBI and circulated to the subscribers periodically may be at regular intervals.”

The SEBI said they will look into the reluctance of disclosure issue followed by the company and directed the companies to furnish every documents to them. The management of Sahara argued that, the issued debentures should not be mistaken as securities; they were hybrid instruments which are outside the purview of SEBI. This argument was dismissed by a tribunal referred by Supreme Court. The Residuary NBFC accepts public deposits in the form of daily deposits, fixed deposits and recurring deposits. Sahara was asked to stop accepting public deposits by 2010. The stand of SEBI and SAT is perfectly justified. The RBI also said that the violations of the two Sahara groups of companies were related to asset-liability management guidelines, maintenance of directed investments, know-your-customer (KYC) norms, payments of minimum interest rate and details of their fund collection agents. The company also violated the standard practice of intimating the investors in time of maturity of their deposits.

Sahara India Financial Corp. Ltd decided to wind up deposits and pay all its customers four years before the deadline set by RBI within March 2012.

Sahara Fixed Maturity Fund (close ended income scheme) had 4 plan options with separate port folios, they are- monthly plan (31 days), Quarterly Plan  (91 days ), Annual Plan (371 days) and 18 months.

Each plan had fixed term, separate portfolio with dividend and growth option. Minimum Investment Rs 5,000

Sahara India Fixed Deposit Interest Rates

Period Interest Rate (%)
6 months 10.00
9 months 10.50
1 Yr 12.00
2 Yr 12.50
3 Yr 13.50
4 Yr 14.50
5 Yr 15.00
6 Yr Double
Daily Collection/ Student’s Savings 7.00

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