Sahara India Financial Corporation (SIFCL), the para-banking arm of Sahara India Pariwar, says around five million of its deposit accounts are unclaimed or unpaid.
There are 4.29 million unclaimed accounts, with Rs 203 crore accumulated. Another 8,80,000 accounts were classified as “claimed but unpaid”, it said in a filed statement. These accounts had Rs 138 crore. “Investors did not turn up for receiving their payment,” the filing said.
These unclaimed/unpaid deposits are a fourth of the 19 million accounts covered under the early prepayment scheme it had announced earlier this week. It says it had accepted deposits of Rs 73,000 crore since inception till June this year. The liabilities now are close to a tenth of that sum, said people close to the Sahara India Pariwar. SIFCL holds most of this sum, which could be Rs 7,000-9,000 crore, according to different estimates, in Reserve Bank of India-approved investment securities and would liquidate these to repay deposit holders.
A residuary non-banking company (RNBC) such as SIFCL has more freedom in money raising than other non-banking companies but its investment norms are stringent. It has to invest all its money in mandated instruments. RBI had appointed two directors on its board to keep an eye on compliance.
T N Manoharan, one of the two RBI-appointed directors, said the prepayment had the needed board approvals. "The RBI deadline was 2015. So, they are only doing it in advance." He directed queries on the terms of prepayment to the company spokesperson. H N Sinor, the other RBI appointee, also directed queries to the company spokesperson. A detailed e-mail questionnaire to the Sahara spokesperson remained unanswered.
“RBI had stipulated that over 85 percent of the deposits need to be invested in G-secs (government securities. This was creating a situation where the company was paying more interest to investors than it was earning from those investments. Therefore, prepayment made sense,” said a source. Analysts said the company could engage some large intermediaries to sell off these G-secs through bulk deals, with minimum impact on markets. “The G-sec market is deep enough to absorb this volume,” one of them said.
REPAYMENT ISSUES
A call centre official told Business Standard the investors would be able to collect repayments from the service centres on production of all documents. An official at a Mumbai service centre said the payment would be available within a week of giving the documents.
Most Sahara agents said they were yet to receive any official communication. Customers are also not clear on the prepayment procedure. This could lead to more unclaimed deposits, said analysts, adding unclaimed and unpaid accounts are a result of poor compliance with know-your-customer (KYC) rules.
Sahara group companies use a network of 685,000 agents to collect money under various schemes.
However, as various financial sector regulators have periodically found, compliance with KYC norms has been partial. This creates a problem in the case of agent dropouts, especially in long-tenure deposits.
Typically, when the maturity happens, the deposit holder does not get the communication due to an incomplete address or is at a loss on how to get the money back. Sahara usually delivers repayment through its 1,508 service centres.
Violation of KYC norms was one of the key charges against SIFCL when it faced RBI action three years earlier. RBI had also found the company had not informed customers when the deposits matured. In its 2008 order to wind down the RNBC, the central bank specifically laid down a condition that, “SIFCL shall ensure 100% compliance with KYC norms for all new deposits.”
Recently, Sebi told the Allahabad high court that two other group companies had incomplete addresses and details of their debenture holders, numbering 6.6 million.
