The Sahara case stems from a 2008 RBI ruling barring Sahara India Financial Corporation from raising fresh deposits, as Sahara's business practices were suspected to operate as a Ponzi scheme. In response, Sahara issued optionally fully convertible debentures (OFCDs) through two companies to collect funds, but had poor records of investor identities. SEBI alleged the funds were improperly rotated between Sahara group companies. The Supreme Court ultimately ordered Sahara to repay over Rs. 24,000 crore collected through OFCDs to SEBI for distribution to investors, but Sahara claimed most was already repaid. When Sahara failed to comply fully, a non-bailable warrant was issued for its chief.

3. What is the Sahara Case all about ?
• Sahara’s case is all about OFCD and its investor. But its root is
in a ruling by the Reserve Bank of India in 2008. Here is a
chronological list of how events unfolded from 2008 to the
issuance of non- bailable warrant to Sahara chief.

4. What is a Debenture ?
•Debenture is the acknowledgement given by the company to u.
•There r situations where the company may need finance. During that
time it issue debentures. By purchasing the debentures it means that u
financed the company the value of debentures and the company owes
u.
•For eg. u bought a debenture worth rs. 1000 it means that u financed
the company by Rs.1000 and the evidence for it is the debenture.

5. Than what is a convertible Debenture ?
•The company may open an option for the debenture holders
to change the debentures to shares.
•Ur position in the company changes from a creditor to a
owner in case of convertible debentures.
•Once the debenture is converted u get share from profit
instead of periodical interest.

6. What is OFCD ?
OFCDs are optionally fully convertible debentures.
OFCD holders can become shareholders of the company if they
chose to do so.
Generally (which is true in the case of Sahara) there is no asset
marked against such investment, in other words they are
unsecured in nature and in case of liquidation of the company
they will be one of the last stakeholders to be refunded.

7. • 1. In 2008, RBI debarred Sahara India Financial
Corporation from raising fresh deposits. Growth of
Sahara’s empire was always a mystery; many
believed it ran a Ponzi scheme by collecting funds
from investors.

8. 2. Sahara decided to issue OFCDs by floating two
companies – Sahara India Real Estate Corporation
(SIREC) and Sahara Housing Investment
Corporation (SHIC). It was the Registrar of
Companies (ROC) that needed to clear these
investment vehicles.

13. :
6. Abraham found out that even though
the Sahara group companies collected
money they did not have proper
records of the identity of its investors.
How and to whom would they then
return the money? Even professional
agencies were unable to locate the
investors.
The man who nailed Sahara

14. :
7. The two companies,
Abraham alleged, intended to
rotate money between group
companies. Though the OFCD
instruments were issued in
the name of the two
companies, cheques were
sought in the name of Sahara
India.

15. 8. When SEBI issued its order on
the wrongdoings of the Sahara
group on June 23, 2011, Sahara
group took the matter
with Securities Appellate Tribunal
(SAT). But SAT held the Sebi
findings to be correct.
:

16. :
9. Sahara group then approached
the Supreme Court but in August
2012, the honorable court asked
the group to repay an amount of
over Rs 24,000 crore to Sebi within
90 days. The regulator will then
distribute the money to bonafide
investors. But suddenly Sahara said
it had repaid most of the money
over the last one year and an
amount of just over Rs 5,000 crore
was pending.

17. non- bailable
warrant with an order to
appear before the court
on March 4.