Category Archives: scams

Sahara freeze order gets Sebi Rs 52 crore in cash, investments: report

New Delhi: Market regulator Securities and Exchange Board of India (Sebi) has been able to get hold of cash and investments totalling about Rs. 52 crore and details of more than 450 acres of land so far through its attachment orders against Sahara group entities.

In the high-profile case involving refund of over Rs. 24,000 crore to the bondholders of two Sahara companies, Sebi had passed orders for attachment of various properties and freezing of accounts in February after the entities failed to deposit the entire money.

Cash totalling over Rs. 23 crore, received from various banks pursuant to these orders, has been invested in a term deposit for now, while investments worth about Rs. 28 crore in mutual funds and demat accounts have also been frozen, sources said.

After passing its attachment orders, Sebi informed all the banks, depositories, mutual funds and NBFCs, among others, about the matter and also requested RBI to direct the chiefs of the banks to transfer the money of Sahara firms to a designated Sebi account.

Sebi had also approached the Collectors of as many as 600 districts to request them not to permit the concerned Sahara entities and persons from any sale or transfer of properties attached by the regulator.

As a result, the District Collectors and Revenue Officers from various parts of the country have provided Sebi details of more than 450 acres of land belonging to Saharas, sources added.

The regulator has already asked the Supreme Court to allow it to appoint an Officer of Special Duty and other officers to deal with the objections and claims relating to the property to be sold and for conducting the sale of the property to garner funds for refunding the investors’ money.

Saharas have so far deposited Rs. 5,120 crore with Sebi towards the refund and claims that this amount is more than sufficient to meet the outstanding liabilities towards its bondholders as the group has already paid close to Rs. 20,000 crore directly to the investors.

The money was raised by Sahara Housing Investment Corporation Ltd and Sahara India Real Estate Corp Ltd from about 3 crore investors through issuance of certain bonds.

However, these claims have been disputed by Sebi before the Supreme Court, which is expected to resume hearing the case next month. In the meantime, Sebi has begun the process for refund of the money to the genuine investors after verifying their credentials.

A pilot study conducted by Sebi for ascertaining the genuineness of investor documents submitted by Sahara, however, found that close to 99 per cent of the bondholders were untraceable, said the sources.

Under this programme, Sebi sent out redemption notices inviting claims to more than 21,000 bondholders but it received less than 300 claims, which are currently under examination.

While more than 7000 notices returned undelivered, there was no response in respect of over 13,000 notices. Sebi will refer these case to Sahara for further verification, the sources said.

Last month, Sebi began inviting claims from Sahara bondholders in a prescribed format and has said it would directly transfer the refund money to the bank accounts of the genuine investors and they can not get the money without having a bank account.

The Supreme Court last month told Sebi to begin refunding the money to genuine investors from Rs. 5,120 crore deposited with it so far, while the matter would be heard further by the apex court on July 17.

As per the court orders, Saharas would also have to bear the costs incurred by Sebi in the entire refund process. Sebi is already believed to have incurred huge costs, including initial expenses of about Rs. 56 crore for putting in place storage, scanning and repayment systems, for the humongous task of facilitating these refunds and Saharas have to clear these bills.

The regulator had contracted Stock Holding Corporation of India (SHCIL) for work relating to storage, digitisation and scanning of investor documents and for creation of a database. This contract alone was worth Rs. 25.97 crore.

Besides, another contract of Rs. 29.88 crore was given to UTI Infrastructure Technology and Services for the work relating to redemption related activities in this case.

The Supreme Court has also appointed a retired judge to oversee the matter at a monthly remuneration of Rs. 5 lakh in addition to travelling, accommodation and other expenses, all of which are borne by Sebi and recoverable from Sahara.

After Sahara firms were told by the Supreme Court to hand over the investor documents to Sebi, the group sent 127 trucks with more than 31,000 cartons of papers to the regulator’s headquarters in Mumbai.

However, these contained only 75 per cent of the entire documents required to be submitted. Finding it impossible to store them at any of its offices, Sebi decided to keep them at a warehouse of SHCIL Projects  Ltd, a subsidiary of SHCIL.

Swiss money: India slips to 70th position; UK on top

Zurich/ New Delhi: India has slipped to 70th position in terms of foreign money lying with the Swiss banks and accounts for a meagre 0.10 per cent of total global wealth held in the Switzerland banking system.

While much hue and cry is made over huge amounts of illicit wealth stashed by Indians in Swiss banks, the latest official data released by Switzerland’s central bank shows that the money they owed to Indian clients at the end of last year was 1.42 billion Swiss francs (about Rs. 9,000 crore).

While the UK continues to account for the largest chunk of such funds, India has now slipped lower to 70th position – the lowest rank among all major economies of the world, shows an analysis of annual data released by Swiss National Bank (SNB) on all the banks present in the European country.

India was ranked 55th for such funds a year ago with a total amount of 2.18 billion Swiss francs belonging to the Indian individuals.

Among the top-ten jurisdictions in terms of source of money with Swiss banks, the UK is now followed by the US, West Indies, Jersey, Guernsey, Germany, France, Bahamas, Cayman Islands and Hong Kong.

The funds owed by the Swiss banks to their UK clients stood at 295 billion Swiss francs, accounting for about 22 per cent of total such funds (over 1.4 trillion Swiss francs).

The major countries ranked among the top-25 include include Singapore, Japan, Italy, Australia,  Russia, Netherlands, Saudi Arabia and Cyprus.

Besides, China was ranked 26th, Canada 28th, Brazil at 39th and South Africa at 50th. India’s neighbouring country Pakistan was also ranked one place higher at 69th, although countries like Mauritius, Hungary, Denmark, Finland, Libya, Brunei and Sri Lanka are positioned below India.

As per SNB data, the Swiss banks saw a decline in funds belonging to most of their foreign clients during 2012 and the funds belonging to their domestic clients surpassed those of overseas ones for the first time in their history.

The total funds with Swiss banks slipped by over nine per cent to a record low of 1.4 trillion Swiss francs at the end of 2012, while the Indians’ money also hit a record low with a fall of about 35 per cent during the year, as a global clampdown against the famed secrecy wall of Switzerland banking system made it unattractive for their global clients.

Total funds held by Indian individuals and entities included 1.34 billion Swiss francs held directly by Indian individuals and entities, and another 77 million Swiss francs through ‘fiduciaries’ at the end of 2012.

Fiduciaries are essentially wealth fund managers who hold the money of Indian private holders and families in the so-called numbered accounts.

The Swiss banks’ direct liabilities towards clients from India include funds held in savings and deposit accounts by Indian individuals, financial institutions and corporates.

The data has been released at a time when Switzerland is facing growing pressure from the US and other countries to share the foreign client details, while its own lawmakers are resisting such measures.

The funds, described by SNB as ‘liabilities’ of Swiss banks towards their clients from India, are the official

figures disclosed by the Swiss authorities and do not indicate towards the quantum of the much-debated alleged black money held by Indians in the safe havens of Switzerland.

SNB’s official figures do not include the money Indians or others might have in Swiss banks in the names of others. The sharp decline in Indian money in Swiss banks during 2012 followed a significant increase in the previous year, when such funds had risen for the first time in five years.

The quantum of funds held by Indians in Swiss banks stood at a record high level of 6.5 billion Swiss francs (over Rs. 41,000 crore) at the end of 2006, but has declined by over five billion Swiss francs (over Rs. 32,000 crore) since then.

For clients across the world, total funds in Swiss banks stood at a record high level of $2.6 trillion at the end of 2007, but has fallen by over $1 trillion since then.

In a White Paper on black money tabled in Parliament last year, the Indian government said that the total liabilities of Swiss banks towards Indians have been coming down since 2006 and fell by more than Rs. 14,000 crore during 2006-2010 period.

Amid allegations of Indians stashing illicit wealth abroad, including in Swiss banks, government has said it is making various efforts to bring back the unaccounted money.

While a new treaty has been put in place for sharing of information on issues related to tax crimes on a prospective basis, Switzerland has also agreed to a limited retrospective clause for such information exchange in case of India.

Experts have been saying that there has been a “perceptible flight of funds” of Indian holders from Swiss banks to other places in the recent years.

At the same time, the global pressure has been rising on Switzerland to ask its banks to share information about their clients with foreign governments.

It is being suspected now that Indians having illicit wealth in Swiss banks may be moving their funds in fear of being exposed due to growing scrutiny. At the same time, even those having legitimate funds in Swiss banks may be moving away, due to a growing level of negativity attached to them.

Govt cuts import tariff value of gold

The government on Monday  slashed the import tariff value of gold to $421 per ten grams and that of imported silver to $709 per kg, considering the falling trend in global prices.

Tariff value is the base price on which the customs duty is determined to prevent under-invoicing.

Last month, the tariff value of gold was at $459 per 10 grams and silver at $737 per kg.

The notification in this regard has been issued by the Central Board of Excise and Customs (CBEC).

The government has reduced the import tariff value of gold as global prices in Singapore have been volatile in the last few days. Global prices today fell by 1.4 per cent to $1,278.94 an ounce and silver by 2.8 per cent to $19.55 an ounce. A similar trend was seen in silver rates as well.

India’s gold import in the second quarter of the current fiscal is expected to more than halve to 150 tonnes, as against around 350 tonnes in the April-June period of the 2013-14 fiscal, as per the Bombay Bullion Association.

Gold in the national capital is costing around Rs 27,320 per 10 grams, while silver at Rs 42,500 per kg.

India eases rules for low-cost builders to access overseas loans

A man walks past a logo of the Reserve Bank of India (RBI) in front of its building in Kolkata May 21, 2012. REUTERS/Rupak De Chowdhuri/Files

MUMBAI | Mon Jun 24, 2013 9:59pm IST

(Reuters) – The Reserve Bank of India has made it easier for property developers to access foreign money in an effort to spur low-cost housing projects, such as slum rehabilitation.

The RBI has extended the limit of $1 billion that can be borrowed through the external commercial borrowing (ECB) scheme to the 2014-2015 financial year from this year.

It will also allow companies to hedge the entire borrowing, protect them from any sharp depreciation of the rupee against the dollar.

“The ECB availed of by developers and builders shall be swapped into rupees for the entire maturity on a fully hedged basis,” the RBI said in a notification on Monday.

The central bank also reduced the minimum experience companies have to have to undertake these projects to 3 years from 5 years.

The Reserve Bank also scrapped the minimum paid-up capital of 500 million rupees for property developers.

The Indian rupee slumped to an all-time low of 59.9850 to the dollar last week and foreign investors have been selling Indian debt, with many of them incurring losses due to their unhedged currency exposure.

(Reporting by Neha Dasgupta; Editing by Louise Heavens)

Not just cost, Food Bill will make us a nation of beggars

Jun 8, 2013

By S Murlidharan

While the jury is still out on whether the Food Security Bill (FSB), crafted and drafted by the UPA government at the centre, would bankrupt the treasury, what is certain beyond  doubt is it would bankrupt the ideals and moral character of the nation sooner than later.

Serpentine queues in front of the numerous community kitchens that constitute one of the cornerstones of the Bill would be an eyesore harking back to the Dickensian era.  Children, both school-going and others, pregnant mothers, the destitute and others would line up both at lunch and dinner time with begging bowls in their hands, as it were.

This beleaguered government somehow believes that the only way to get a person’s vote is through his stomach – by giving him a free lunch and dinner. MNREGA, despite warts, has at least had the virtue of not giving a man the fish but providing him the means, albeit limited, to buy the fish.  But with elections looming large, the ruling dispensation had to go for broke given its dismal track record, especially in its second innings.

Small wonder, it wants to return to power on the nearly free food platform which the FSB is all about. Apart from running giant community kitchens, it has the grandiose vision of providing foodgrain to as much as 67 percent of the populace at Rs 2 or Rs 3 a kg – virtually gratis.  To be sure, the nation must take special care of pregnant women.  But their dietary needs cannot be addressed by community kitchens.  They need food rich in iron, protein and other nutrients and in larger quantities since the idea is also to take care of the fetus inside her. Lumping pregnant women with all and sundry is, therefore, another crude and ham-handed example of following a one-size-fits-all approach.

Will long lines for food be a result of the Food Security Bill? Representational image. Firstpost

Will long lines for food be a result of the Food Security Bill? Representational image. Firstpost

Running massive community kitchens would be a logistical nightmare and prone to corruption.  Procurement officials must already be salivating at the immense and never ending prospect of making money on the sly by compromising with quality, over-invoicing and its concomitant kickbacks, etc.  While, with some effort, a modicum of discipline in procurement of cereals and pulses can be brought about, handling perishables like vegetables and fruits, being a different kettle of fish, can challenge even the most foolproof systems. The humongous cost of maintaining the food bureaucracy, and the now well-established phenomenon of losses in foodgrain storage and distribution, are strong reasons to rethink this scheme.

Once the food is ready to be served, the problem would be how to tell the intended beneficiaries from the charlatans.  Will age-proof be demanded of the children before they are served?  Will a person be required to queue up before the community kitchen of his locality or his place of work or any place at all?

Food riots are all too common in the godforsaken parts of Africa.  It could happen in India too if people accustomed to be being fed without having to work for it suddenly find that the gravy train has come to a screeching halt for the nonce.  The food subsidy would be well targeted and well spent if the intended beneficiaries, like pregnant women and the destitute, are financially empowered with direct cash transfers. If the aggressive, macho male head of the family boozes away the money, the familiar refrain of the detractors, well God alone can help the family.

Had the UPA government followed up its MNREGA initiative with a stronger initiative on free healthcare for the flotsam and jetsam of society, duly cross-subsidised by the rich, which is what Obamacare is all about, it would have come out with flying colours.  But for that to happen, our Finance Minister must overcome his reluctance to tax the rich meaningfully.  The super-rich tax consisting of the 10 percent surcharge on those earning in excess of Rs 1 crore ushered in by the Finance Act, 2013, is as farcical as it is inadequate. It, at best, is a tap on their wrists.

A better way to tax the rich would be to tax share market gains by making bold to bring back the capital gains tax, and reach out to the colossal gains made by FIIs in India.  No one is going to abandon India merely because it asks market participants to pay tax, a fear aired by no less than Finance Minister P Chidambaram himself often. If the British government can agonise over the tax lost by the alleged shenanigans of Google, why should India be pilloried by its own commentariat for seeking to tax Vodafone-like share transfer deals consummated in distant and clandestine islands?

A welfare state, or the one which wants to preen with pride as one, must be prepared to play Robin Hood to the hilt.

(The author is a chartered accountant)