Sahara and the Parallel Deposits

How Sahara group companies raised over 24,000 crore rupees from millions of small investors through bonds without SEBI approval, and the long legal battle to refund them.

The Sahara group was one of India’s best-known conglomerates.

The issue

Two Sahara companies raised over 24,000 crore rupees from around 3 crore investors through optionally fully convertible debentures from 2008 to 2011.
SEBI said they did so without proper approval and disclosure.

Supreme Court

In 2012, the Supreme Court ordered Sahara to refund investors with interest through SEBI.
Founder Subrata Roy was jailed in 2014 for failing to comply, later released on parole.

Refunds

SEBI struggled to find many investors; relatively few claims came forward.
In 2023, the government launched a Sahara refund portal for depositors of Sahara cooperative societies.

Death

Subrata Roy died in November 2023; the case continued.

Lessons

Regulatory arbitrage: raising money outside regulated channels.
Small investors need protection from unregulated schemes.

The small investor

A rickshaw puller invested savings with a Sahara agent in his town, not knowing whether the scheme was properly approved.

Thinking all investment schemes are regulated

Sahara raised money without proper approval.

Key takeaways

Sahara companies raised over 24,000 crore from about 3 crore investors.
SEBI said this lacked proper approval.
The Supreme Court ordered refunds in 2012.
A refund portal launched in 2023.