Tag: RBI

SEBI versus Sahara

On 27/10/2012 SEBI came out with half page advertisements drawing attention of Bond Holders of Sahara India Real Estate Corporation Ltd. (SIRECL) and Sahara Housing Investment Corporation Ltd. (SHICL). It said – DON’T BE FORCED !!! DON’T BE MISGUIDED !!!

The Supreme Court vide its order dt. 31/8/2012 had directed the two Sahara companies to refund the amounts collected by them through red herring prospectuses along with interest at 15% p.a. to SEBI within 3 months i.e., by 30/11/2012 and to furnish all relevant documents to SEBI within 10 days.

SEBI ad said the Saharas have not submitted the relevant documents. SEBI has been receiving complaints from investors that they are being forced by Saharas/their agents/officials to switch-over their investments to other schemes in other Sahara Group Companies. Some investors have also complained that their investments have been switched over to the said schemes of Sahara Group Companies without their consent. SEBI advised the subscribes to the Bonds of SIRECL and SHICL to hold on to the original documents relating to Bonds and produce the same to SEBI when called for an not to yield to any pressure from any person for converting or switching over their investments in Bonds to any other Schemes like Q Shop etc.

Sahara owes 24,000 crore rupees to investors. It is trying to avoid making those payments. Sahara came out with full page ads on 1/9/2012 claiming they have done lot of good work but instead of getting a pat on their back faced injustice from a faulty system. Sahara blamed Income Tax Department, Reserve Bank of India and the machinery (SEBI?) that presented the facts incorrectly before the Respected Judges of Hon’ble Courts. Sahara did not say they will honour the Supreme Court judgment and refund the amounts to investors. Instead of spending crores of rupees on ads it would have been better for Sahara to use that money to refund the investors.

Getting back black money

There is a debate on how to get back black money held abroad by Indians. Some want it to be declared a national asset. Some say it is red money acquired through crimes like drug trade. Some say there is more black money in India than abroad. The amount of black money is a conjecture. Some mention 25 lakh crore rupees. BJP blames Congress for not doing enough to get back black money and wants the names of 782 account holders given by France revealed. Congress blames BJP that it did nothing when it was in power. Some say getting money is more important than knowing names.

A person who has earned money legitimately should be free to keep it in bank in India or abroad. India allows Non-Resident External accounts. Trusts and NGOs can receive foreign money. Many foreign account holders have RBI permission which should not be a requisite for keeping money abroad. Getting money and knowing names are equally important and it is not an either or situation.

There is a simple way to get back black money held abroad. The finance minister of India should make a declaration. “We want rupee to equal American dollar in 50 days, euro in 70 days, British pound in 80 days, Kuwaiti dinar in 170 days and thereafter remain the strongest currency in the world. To achieve this we will sell one billion or more dollars per day. On Mondays we will sell two billion dollars or more.” This will scare people who have black money abroad and they will get back the money through various ways. With 300 billion dollars in foreign exchange reserves selling one billion dollars per day is not a problem. Petrol prices and inflation will come down.

The government may consider amnesty to people who have black money abroad like voluntary disclosure schemes for Income Tax evaders we had in the past.