Sahara investors fear for their deposits

The arrest of Sahara chief Subrata Roy last week and the court case over an outlawed bond scheme are raising fears among some investors who worry they will not get their money back. One of them is Anil. The 30-year-old travel agent put his Rs 2 lakh in another investment scheme offered by Sahara, which bills itself as "the world's largest family". He fears the case could hurt his investment."I have told my agent to surrender my deposit [partially]… I am worried, but my money will come back, my agent has said," Anil told India Insight, declining to give his last name. "I will hesitate a bit to invest any money now. If the court case goes on, I will redeem all my Sahara investments."

Sahara's investment programmes include schemes that are similar to a typical Indian bank's fixed or recurring deposits. The company largely sells such schemes to small investors in towns and rural areas through their network of agents. These financial products allow investors to deposit small amounts such as Rs 50 a day for returns that some agents and investors said are higher than what bank deposits generate.

Zia-ul Haq, who runs a small departmental store in Uttar Pradesh and invests less than Rs 50 daily in the Sahara Minor scheme, said the Sahara agent who collects his money has assured him about his investment. "There is some worry, but I am confident… It is natural that if you have invested money somewhere, you will be worried in such cases," he said. "There is always a risk in private [companies]."

While there is no official company website which explains Sahara's investment schemes, agents and investors used names such as M-Benefit and Minor to identify some of the schemes. Sahara also issues a computer-printed receipt with hologram and passbooks as proof of investment, according to documents seen by this reporter.

The court case has made life tougher for agents who pitch these schemes. Deshdeepak Parashar has been selling Sahara schemes in the Pratapgarh district of Uttar Pradesh for the last three years, and has about 150 clients, including Haq. He is finding it hard to look for new customers. "Customers called me and were worried about losing their money when [Roy] was called to the court. I have received no calls after the arrest," said Parashar, adding that investors do not want to be associated with Sahara right now. "When people start pressing me too much, I feel depressed. I have been thinking of switching the business for a year," he said. "I want to be associated with LIC (Life Insurance Corporation of India)."

Delhi-based agent Ravi Kumar, who has been selling Sahara schemes for two months, hopes business will pick up once the court case is settled. "There has been some negative response in the market. We are not approaching new investors right now," said the 35-year-old real estate company employee who sells Sahara investment products on the side. Sahara agents typically file investment documents at local offices.