Securities and Exchange Board of India (Sebi) chief UK Sinha today told NDTV that despite the regulator informing the West Bengal government, no timely action was taken against chit-fund companies like Saradha that allegedly cheated thousands of investors.
"The action taken perhaps by the state governments could have been quicker and faster. I would say if those actions were taken in time, things would have been different," Mr Sinha said.
"Even otherwise we also got a new set of problems in West Bengal that the district courts started passing injunction orders against Sebi's orders whereas my reading of the Sebi Act is that they have no jurisdiction. It was pointed out to them but the persisted, one district court after another. I think 10 or 11 district courts have passed orders against Sebi," he added.
Saradha lured lakhs of investors to deposit money in its schemes with glossy brochures and the promise of abnormally high returns. A perceived closeness to the ruling Trinamool Congress in West Bengal allegedly also helped it get investors and agents on board - Saradha had Trinamool Rajya Sabha MP Kunal Ghosh heading its media division and MP Satabdi Roy was featured in its promotional material. Chief Minister Mamata Banerjee had inaugurated two Saradha offices.
An official estimate says Saradha had mopped up about Rs. 1200 crore through its chit funds, but some calculations put that the figure closer to Rs. 4000 crore.
Certain strengthening of the Sebi Act is required, Mr Sinha opined adding that the Government of India is "seriously" considering the same.
Speaking on the high-profile Sahara case involving over Rs 24,000 crore raised, the regulatory authority head confirmed that the number of genuine investors were "quite low."
"You're coming to a particular case (Sahara) which is subjudice before the Supreme Court but your impression on this question is correct. We have done our analysis and we have informed the Supreme Court about it, about the percentage of investors we found to be genuine, it's quite low," Mr Sinha told NDTV.
The market regulator in the meantime has already begun the process of refund to individual investors who have been verified by it.
The money is being refunded only in cases where Sebi has not found any multiplicity during its verification process. Refund for others will have to wait till the next direction from the Supreme Court, which is likely to hear the case on July 17.
The refunds are being made from the Rs 5,120 crore that have been deposited by the Sahara group, which claims to have already returned close to Rs 20,000 crore to the bondholders of two Sahara firms directly.
(With inputs from PTI)