Interview: The Sahara Scam
Interview with Vijay Kumar Verma, of Convenor, Sahara Sangharsh Samiti, Udaipur
1. What is the SEBI case regarding Sahara Credit Cooperative Society not paying its dues?
Vijay Verma: The dispute of Sahara and SEBI is going on regarding two schemes, related to real estate and housing.
2. When did this dispute emerge? How many depositors are likely to be impacted and how much money is involved?
This case is going on in the Supreme Court since 2013. The savings of 10 to 12 crore depositors is stuck in this dispute. These depositors had invested in the Sahara Credit Cooperative Society.
3. In which case was the Sahara chairman Subrata Roy convicted and sent to jail? On what grounds is he out on parole and for how long?
The Supreme Court had convicted Subrata Roy in 2013 in a dispute between Sahara and the SEBI. As of now, the ongoing case in the Supreme Court involves two schemes run by Sahara, related to real estate and housing. This dispute pertains to more than Rs. One Lakh Crore dues that are yet to be paid.
Roy was granted parole by the Supreme Court because his mother had died, under the condition that Rs. Ten Thousand Crore would be deposited in the Supreme Court. However, Roy has remained out of jail after he was released on parole.
4. What are Sahara’s depositors demanding?
Sahara investors are mostly poor laborers or middle class. These investors faced great financial difficulties when they lost their savings in various Sahara schemes. Today, their only demand is that they should get their dues back with immediate effect.
5. There is an allegation that in the Amby valley, Pune, project, the money of small depositors was used by the Sahara Credit Cooperative Society. What do you have to say about this? Is this also against any relevant law?
If any credit cooperative society invests anywhere, then it can invest only as per guidelines from the nodal department of the concerned government. Sahara India Credit Co-operative Society is known to have invested more than Rs. 28,000 Crores in Amby Valley on its own volition, which is really in plain and in simple terms cheating with the public.
6. What are credit cooperative societies in layman's language, and how did Sahara manage to reach out to millions of depositors through them?
Sahara Credit Co-Operative Society had taken the license to operate as a Multi State Co-Operative Society from different State governments. It used to get money from field workers, through schemes of daily, monthly savings and fixed deposits running in all the states.
The Sahara Credit Cooperative Society had built a huge team of field workers who were selling big dreams to people. At one time, these field workers could not see anything except Sahara. It is through this vast army of field workers that Sahara collected big money for all kinds of schemes of Sahara from all over India. With time, many deposit schemes were launched and sold by marketing the schemes as lucrative savings products with high rate of interest.
7. What is the legal role of the concerned Ministries, Departments or Agency of the Government in regulating the functioning of the Credit Co-operative Society?
The license of the Multi State Co-Operative Society was obtained from the Ministry of Agriculture, Cooperation and Farmers Welfare, Delhi. As of now, the concerned department dealing with cooperatives has been separated from the Ministry of Agriculture, Cooperation and Farmers Welfare and is under the Ministry of Cooperation (formed in July 2021) headed by Amit Shah. Another Sahara scheme is licensed from the Government of Andhra Pradesh. For all of these schemes, the nodal agency remained the Ministry of Agriculture, Cooperation and Farmers Welfare (now Ministry of Cooperation).
8. Which laws do you think Sahara did not follow? What has been the role of the Ministries, Departments, Agencies so far?
Like any Multi Credit Cooperative Society, Sahara India Credit Cooperative Society has to disclose how much money is invested and where it is invested. All this is monitored by the Department under the Ministry of Agriculture, Cooperation and Farmers Welfare (now Ministry of Cooperation) which checks the balance sheets and the Profit and Loss accounts. Over time, the aggrieved investors began to get concerned as to why the credit cooperative society was not paying their investment back.
Despite supposed monitoring by the concerned government department, Sahara India Credit Cooperative Society invested in a real estate project under the same Sahara group – Lonavala Amby Valley – on its own, without permission from the Ministry of Agriculture, Cooperation and Farmers Welfare (now Ministry of Cooperation). It also withdrew Rs. 20,000 crores to fund Subrata Roy’s parole. In fact, investments in other places too was undertaken on the basis of dubious reports where wrong figures were quoted. Investors who invested voluntarily based on trust faced a deceit, and today a vast section of ordinary citizens of India are facing hardships regarding repayment of their investment.
On 22 March 2022, the Delhi High Court took cognizance of various complaints and has banned Sahara’s investment in new businesses. The Registrar, Cooperative Societies, has been asked to redress various complaints at the earliest. The Registrar has also been instructed to submit a compliance report.
9. What has been the role of RBI and SEBI in Sahara's case?
Vijay Verma: The Reserve Bank of India has withdrawn the non-banking license issued in 2008. The RBI had given Sahara time till 2015 to repay what was due under the schemes launched using this license. This license was ultimately surrendered because of the tough conditions placed by the RBI. According to these conditions, 80% of the money had to be kept as security in Government issued financial instruments, and management was left only with 20% for other activities.
SEBI was misled by the management of Sahara. Permission for Sahara’s real estate and housing scheme was taken on the basis of a dubious wrong report submitted to the regulator. Sahara started the planned scheme of monthly savings and fixed deposits. It did not launch the promised IPO and when caught, it was ordered to pay back the investors. It was from here that the dispute of Sahara - SEBI began.
From 2013 to July-August 2020, all the field workers were lured into dubious real estate and housing schemes, and the bonds of real estate and housing schemes were switched to other schemes. These schemes were made lucrative by Sahara offering 2.35% interest per month for 6 years. Even till 2018, no repayment was however made to the investors, and the investments were once again shifted to some other scheme. The old schemes were shifted to new schemes, and in the case of emergency, some depositors were repaid part of their investment.
10. Are there any restrictions on Sahara right now? Are they still working and allowed to take savings from people?
All the divisions/verticals run by Sahara were unsuccessful. Several schemes were closed midway or banned by the government, and ordinary people who had invested in these schemes bore the brunt. Sahara Life Insurance is banned from doing new work. The large and hefty fee was prohibitive for children of general public but for the elites. Agents who were lured with high commissions also have not been paid. All kinds of product divisions and housing projects have failed. Ordinary depositors small savings have been diverted in commercial businesses. Ordinary depositors’ money was invested in FMCG and in endorsing the Indian Cricket team. Despite all this, Sahara is still running some schemes, in a blatant violation of the law. Some hope has however now emerged, with a court in MP issuing a non bailable warrant.
11. How many cases related to Sahara are going on in the courts till now and what is their status?
Thousands of FIRs have been filed all over India; many arrest warrants have been issued against Subrata Roy and his management. However, the police hasn’t yet arrested the biggest thug who cheated thousands of poor people. This of course raises a question mark on the functioning of the police administration. It has been conclusively proved that Sahara cheated ordinary people, and yet all agencies from the Central Government to various State Governments and local administrations seems to be complicit. This also raises a serious question mark on the India’s judicial system.
12. What do you have to say in response to this?
All we have to say in this is that both the Central Government and the State Governments should negotiate to get justice and repayment of investment made by ordinary people. They should take concrete action against Sahara, and help people get back their investment by seizing Sahara’s property.
13. Can you give information about the struggles of the Sahara Sangharsh Samiti in Udaipur?
The position of Sahara Credit Cooperative Society is very bad. Poor people have been kept in the dark. In Udaipur city, amount pending for repayment is more than Rs. 2000 Crores. If we talk about the Udaipur division, more than Rs 6000 crores is pending and for the whole of India, the pending amount is more than Rs One Lakh Crores.
In Udaipur, the Sahara Sangharsh Samiti’s struggle is going on for the past one and a half years. It has also won some repayment to the investors, after filing a complaint against the Sahara Credit Cooperative Society in the Ministry of Agriculture, Cooperation and Farmers Welfare (now Ministry of Cooperation) in Delhi.
The Sangharsh Samiti has also approached the SP and District Collector of Udaipur, and all officers on the high posts in the Rajasthan Government. Our Sangharsh Samiti of Udaipur is attempting to provide justice to the poor people. Efforts are being made to make people aware, in order to prevent people from falling into the trap of such fraud credit cooperative societies. We are running a mass movement and also pursuing the legal path to ensure repayment of peoples’ investments. We hope the struggle of people of Udaipur and their resolve will save the Sahara depositors across India.
14. What do you expect the government to do? How do you think it should intervene?
Vijay Verma: All directors of Sahara India should be jailed for life or else 100% repayment should be made. Nothing short of this is acceptable to us.