India’s Supreme Court on Wednesday gave the giant Sahara business group extra time to comply with an order to repay billions of dollars it collected from small rural savers through illegal bond sales.
Sahara, a famous name in India through its sponsorship of the national cricket team, raised around 240 billion rupees ($4.4 billion) from tens of millions of savers in a process later judged by authorities to be against the law.
The court said it appeared the Sahara group was not in a position to make the entire payment right now.
“We have taken a slightly liberal view with the concern of depositors (in mind),” the three-judge bench headed by Chief Justice Altamas Kabir said, the Press Trust of India reported.
The court ordered the group to pay 51 billion rupees immediately to the Securities and Exchange Board of India, the securities regulator, which is overseeing the repayment process.
The remainder should be repaid in two instalments — the first in early January and the rest by the first week of February.
Late in August, the court said Sahara, whose interests run from real estate to entertainment to financial services, had “no right to collect” to sell the bonds to 30 million investors without complying with regulatory provisions.
The court ordered the group to repay the money with 15 percent interest by the end of November but Sahara missed the deadline.
The Sahara empire, headed by flamboyant billionaire Subrata Roy, embraces the iconic New York Plaza Hotel, purchased just last month for $575 million, a stake in a Formula 1 racing team and a sprawling Indian luxury township.
The dispute is the latest in a string of run-ins between regulators and Roy, a hero to millions of poor Indians for his rags-to-riches story and who has a mansion modelled on the US White House — only bigger.
In 2008, Sahara shut its operations as India’s biggest non-bank deposit-taking firm on the orders of the Supreme Court which was worried about the soundness of the investments in which the money was being parked.
Observers say much of Sahara’s fundraising success rests on the fact that vast numbers of Indians in rural areas have no access to banks and no other place to put their money than in poorly regulated non-bank institutions.
There was no immediate comment from Sahara on the court’s decision but the group, which said it has assets worth a total of around $14 billion, has insisted it has the funds to repay the money.
India's Sahara wins more time to repay $4.5 bln to savers
