Sahara collecting consent letters from OFCD investors showing refunds

Last Updated: Wed, Nov 28, 2012 19:21 hrs

Several agents of Sahara India Parivar are collecting “sehmat patra” (consent letters) from holders of optionally fully convertible debentures (OFCD), showing that the money has been refunded to them.

Sahara India Real Estate Corp and Sahara Housing Investment Corp have been directed by the Supreme Court to refund over Rs 24,029 crore raised from some 30 million investors through the OFCD issues. The Securities and Exchange Board of India (Sebi) has been told to complete this process by November 30 after verifying the genuineness of investors or remit the money to government coffers.

Agents, estimated to be a million strong, who sold OFCDs, often termed housing bonds, have been ordered to collect these letters, failing which their commissions are being stopped. With these consent letters, many of which are pre-dated, with dates ranging from as early as April to show that refunds were spread over a long period, documents such as account statements and passbooks in the hands of the customers are being collected, people with direct knowledge of the matter told Business Standard.

These letters are being collected on a war footing and processed. A deadline of November 30 has been given for this work, according a Sahara India Parivar member, who requested anonymity. While this documentation process has been on, a significant portion of the money deposited in the accounts have already been transferred to the Q-Shop plan, another money raising plan being marketed as a retail venture.

A Sahara group spokesperson, in an email response on Saturday, said the reinvestment process was part of the “human service” of the Sahara agents “It is very wrong thinking, understanding and conclusion of the whole thing. Right from last 30 years, we have observed that our field workers try their best to pursue the depositors/investors to reinvest in some other scheme of the group because they get their livelihood from that since they earn commission on it. They always impress and hold their introduced depositor/investor by giving best human service throughout the tenure of the scheme.”

He added that “even after too much of persuasion”, they have observed that a big percentage of depositor/investor do not come back and go away with a 100 per cent maturity/redemption amount. “Another big percentage keep back their principal investment amount but they accept field workers’ request and reinvest the amount of earning with the company and a good percentage they reinvest. Of course, our study says the percentage varies from time to time and from area to area and (is) also based on socio-economic condition of the country.”

Sebi, in newspaper advertisements issued on Saturday and later during the week, advised investors not to hand over any documents to Sahara agents or agree to transfer the money. It also said complaints have been received that investors are forced to convert their investments into Q-Shop, which is against Supreme Court directions.

Business Standard has reviewed letters sent by Sahara to agents and branch officials offering commission rates of up to eight per cent for transferring “existing ” investors into the new Q-Shop plan. The group has even announced a lucky draw scheme for agents transferring a minimum of Rs 3 lakh of “existing amount”. The first prize was a BMW car. “One lakh field workers to be selected in the draw” the document said. The scheme was open between July and October.

These activities are contradictory to the group’s statements in public domain and with judicial and quasi-judicial authorities. For instance, with Sebi and Securities Appellate Tribunal, the group companies have said that they require additional time to make Xerox copies of documents that they already possess.

The spokesperson did not deny the instructions to agents (also known as field workers) and actions against lagging agents, but he said these complaints might be from a few “greedy” investors. “About some complaints as you have said around 1,000-2,000 of 30 million investors you shall accept, everywhere there are very small-minded, greedy people (who) want to extract maximum. For all time we have seen some out of crores keep on sending strong, nasty and concocted complaints to the Reserve Bank of India, now to Sebi with a copy to Hon'ble President, Hon'ble Prime Minister, etc. They do it for greed, expectation to pressurise us for squeezing extra money and different extra benefits, concessions, etc, from company.”

The figures show a similar behaviour with other institutions, such as Post Offices and LIC, where commissions are paid, the spokesperson added.

The member of the parivar, which has over a million members, added that the Sahara headquarters at Lucknow is closely monitoring the operation. “Recently, a franchisee who refused to do conversions was told that his franchise will be terminated if he refuses to do so,” he said, adding, “we used to have couriers sent every week to the head office. These days we have a daily courier. Calls are being made to individual agents cross checking with a list of his customers and the number of letters yet to be received updated on a regular basis.”

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