SEBI begins Sahara refunds, but investors need complex ID proofs

The Securities & Exchange Board of India on Tuesday started the process of refunding money to those who had invested in two indicted Sahara Group companies through optionally fully convertible debentures (OFCDs).

The market regulator, under directions from the Supreme Court, issued a four-page format for application that investors in Sahara India Real Estate Corp (SIRECL) and Sahara Housing Investment Corp (SHICL) should use to claim refund from the regulator (See: SC rejects Sahara group's review petition on OFCD refund order).

Among other things, it is mandatory for bondholders of the two companies to have a bank account to receive their refund. SEBI advised bondholders to open a bank account in case they did not have one.

In a press release on Friday, SEBI said that investors submitting their claims for refund have to furnish a certificate from their banker that their signature, address and photograph in the refund application match those with the bank.

This is in addition to the requirement of providing identity and residence proofs and details of their investments in the two Sahara companies.

SEBI said that tax would be deducted at source wherever applicable and that PAN was mandatory for claiming exemption.

Claims of genuine investors with multiple deposits will be kept on hold till further directions from the apex court, said SEBI.

According to the Supreme Court's order dated 31 August 2012, more than 2.96 crore investors were to be paid over Rs24,000 crore as on 31 August 2011 (See: SC orders Sahara Group firms to refund Rs17,400 crore to investors).  The apex court had ruled the OFCD offers that two Sahara group companies had used to mobilise money from investors were not according to the law.

It had ordered the Lucknow-based group to deposit about Rs25,000 crore with SEBI.