Regulator to outsource truck-load of Sahara job

The Securities and Exchange Board of India is eager to remove the burden of the truck-load of investor database that Sahara has submitted as per the order of the Supreme Court.

The market regulator has thus floated a multi-crore tender, under which it has invited registry and transfer agents (RTAs) who can handle data processing work for an estimated 300 million application forms of nearly 30 million beneficiaries. The cost of such a project, say industry sources, could come to around Rs 100 crore.

Though Sebi has not mentioned in the tender offer that the work is related to the controversial Sahara debenture issue, registry agents and regulatory officials say the tender is mainly for data processing work of the Lucknow-based company.

Sahara had raised nearly Rs 24,000 crore through optionally fully convertible debentures (OFCDs) from 30 million investors in the country. The issue ran into controversy, leading the Supreme Court to order the refund of the entire money to investors, with 15 per cent interest.

Sahara had to deposit this money with Sebi, which in turn was suppose to refund the entire sum of Rs 24,000 crore to investors. The court asked Sahara to furnish the estimated 30 million investor data base to Sebi. Following this, Sahara on September 12 sent two truckload of documents to the Sebi headquarters at Mumbai's Bandra-Kurla Complex. Sebi only partly accepted the documents and rejected the consignment that had reached post the deadline.

Last Friday, the court asked Sebi to deal with the issue on its terms but stressed that money should be returned to the investors. Sebi officials say they will accept the documents and conduct a proper due diligence and know-your-customer (KYC) of Sahara's 30 million investors.

Sebi had put out the tender on September 26 and the deal is likely to be finalised by the end of this month. The RTAs will submit their bids on Monday. The RTAs are supposed to quote their price per folio and to scan per document, which have not been shown to them yet.  Also, Sebi will bear the transportation cost of sending these documents to the RTA's office from Sebi's Mumbai headquarters.

Documents sent by Sahara are said to have details of investors, supporting redemption papers, application forms, approval and allotment of bonds and run intgo million of pages. A part of Sebi's job is also to ascertain how many of these investors were genuine so that the dummy applications can be weeded out.

Sebi in its tender has said that RTA will have to undertake, “creation, updation due validation process and maintenance of electronic database of beneficiaries based on the documents to be made available. This should duly capture all names, details of single/joint ownership, addresses, bank particulars, nature of documents submitted as proof of identity and proof of address, record of in-person verification, etc. Live Folio Maintenance which includes validating of data entered into database vis-à-vis the physical copies.”

Though Sebi has not mentioned any deadline in the tender by which the work has to be concluded, the work of returning money to investors was to start in three months. The RTAs, however, say the work would definitely take much more time than that.