New Delhi, March 15
Capital markets regulator Securities & Exchange Board of India on Friday sought the Supreme Court’s permission to arrest Sahara group promoter Subrata Roy and two of its directors, Ashok Roy Choudhary and Ravi Shankar Dubey, for their failure to implement the court’s August 31, 2012 order.

In the 2012 verdict, the court had directed two Sahara group companies — Sahara India Real Estate Corp and Sahara Housing Investment Corp to refund Rs 24,029 crore they had raised in 2008-09 by flating optionally fully convertible debentures (OFCDs), violating investor protection norms.

“Pass an order permitting SEBI to take measures for arrest and detention in civil prison of Sahara’s promoter, Subrata Roy, and the two male directors, namely, Ashok Roy Choudhary and Ravi Shankar Dubey after giving reasonable opportunity of hearing,” the market regulator said in its petition.

A bench headed by justice K.S. Radhakrishnan said it would consider SEBI’s application, possibly after the Holi festival break.

“This application has become necessary in view of the recalcitrant attitude” of the two companies, their directors and the promoter, SEBI said. The directions contained in the 2012 judgment “were not complied with” and even the installments had not been paid.

Also, the two companies had not implemented “simple directions” such as furnishing data, details of properties and the nature of entities wherein the investments had been made, it said.

“Shockingly,” the companies were now claiming that all other other amounts except Rs 2,620 crore had been refunded. “In view of the open, continued and consistent defiance of the orders of this court and those of SEBI, it is necessary that drastic measures are taken to protect the interests of 30 million investors,” the market regulator has pleaded.

In the 2012 verdict, the Supreme Court had asked the two companies to return the money within three months with 15% interest. While Sahara India Real Estate had raised Rs 19,400.87 crore, Sahara Housing Investment had mobilized Rs 6,380.5 crore. The amounts stood at Rs 17,656.53 crore and Rs Rs 6,373.20 crore, respectively, as on August 31, 2011 following premature redemptions by some of the investors.

The Supreme Court had asked SEBI to ascertain the genuineness of the 30 million subscribers to the OFCDs and directed Sahara to furnish all the documents, particularly the application forms and allotment of bonds, to the regulator within ten days for this purpose.

SEBI will refund the funds to the investors after crosschecking the red herring prospectuses with the documents provided by Sahara.

“If the Sahara group fails to comply with these directions and do not effect refund of money as directed, SEBI can take recourse to all legal remedies, including attachment and sale of properties, freezing of bank accounts etc. for realization of the amounts,” the court had ruled. 

Mumbai, March 15
The finance ministry and the Reserve Bank of India are investigating allegations of money laundering practices at top private sector lenders ICICI Bank, HDFC Bank and Axis Bank.

Goldman Sachs, meanwhile, said the allegations, if proven, could slow growth for private sector lenders in India.

The probe by the RBI and the government follows an investigation by an independent journalist, who said on Thursday that he had video footage of the lenders' branch employees suggesting to an undercover reporter methods to launder money.

"All government agencies and regulators are working together to probe charges," Rajiv Takru, secretary of financial services, told a business TV channel on Friday.

ICICI Bank, HDFC Bank, and Axis Bank each said on Thursday they were investigating the allegations but defended their internal controls aimed at preventing money laundering.

"The RBI is collecting information, and the RBI has been in touch with the banks. At the moment, that's all I can say," Urjit Patel, deputy governor of the RBI, told reporters late on Thursday.

Shares of the three lenders fell on Friday, with ICICI Bank down 4%, HDFC Bank down 1.5%, and Axis Bank down 1.5% as of 12:08 p.m.

Shares of the three big lenders fell briefly on Thursday but recov ered to end the session with gains following lower-than-expected core inflation data. — Reuters

The BSE benchmark Sensex on Friday slumped by 143 points on heavy selling in private banks, including ICICI Bank and HDFC Bank, following government’s promise that action will be taken against the guilty in alleged money laundering scam. The broadbased NSE Nifty index Nifty fell by 36.35 points to end at 5,872.60, after touching the day’s high of 5,945.65. ICICI Bank and HDFC Bank were among top losers in 30-share Sensex. In New Delhi, Financial Services Secretary Rajiv Takru said both the RBI and the finance ministry are collecting information. If the allegations are established, then whoever is guilty will pay the price, he added. 

ICICI Bank has suspended 18 employees, a day after the lender and two of its peers were accused of indulging in money laundering activities. The suspension is pending the bank's investigation into money laundering charges, sources said. The probe is expected to be completed in two weeks. — PTI

New Delhi, March 15
The public offer of state-run National Aluminium Co was fully subscribed before the close of market hours on Friday, guaranteeing at least Rs 515 crore to the government from the stake sale.

The auction, which started in the morning, had received bids for over 13.21 crore shares by 1505 hrs, against an offer of over 12.88 crore shares, according to stock exchanges' data.

The indicative price, which is the weighted average price of all valid bids, was Rs 40.01 a share. At this price, the government would garner at least Rs 515 crore.

The Empowered Group of Ministers on disinvestment, headed by Finance Minister P. Chidambaram, on Wednesday cleared the stake sale of 25.77 crore shares, or up to 10%, in Nalco through the Offer For Sale (OFS). The government is selling 5% stake, with an option to retain another 5% of the oversubscription. The government had fixed the floor price at Rs 40 apiece.

Shares of Nalco were quoting at Rs 40.40, down 8.70 per cent from its previous close on the BSE. During the day trade, the Nalco stock fell to a low of Rs 40.30.

Bids for over 3.46 crore shares were with 100 per cent margin, meaning if a bidder decides to withdraw later he can do so. Over 9.56 crore shares attracted bids with zero per cent margin, according to the NSE data.

Final bids and the cutoff price is likely to be announced later in the day after stock exchanges compile all data.

The number of shares on offer is lower than what the Cabinet Committee on Economic Affairs (CCEA) had approved for in September last year. The CCEA had cleared a 12.5% stake sale in the navratna PSU. The department of disinvestment has held roadshows in Singapore, Hong Kong, Japan, the US and the UK last month for disinvestment of the aluminium firm.

At present, the government holds a 87.15% stake in Nalco.

The stake sale was deferred in November last year as the government wanted to wait for the company's third quarter earnings to get a better valuation. — PTI

Mumbai, March 15
The slowdown in India's economic growth is less supportive for the country's sovereign credit ratings, and the government may find it challenging to meet the revenue projections in its 2013/14 budget, an analyst at global ratings agency Standard & Poor's said on Friday.

The comments, although not drastically different from the rating agency's previous stance, nonetheless hit Indian shares and bonds, highlighting lingering concerns that the country may lose its investment-grade rating.

S&P rates India at "BBB-minus", one notch above junk, and cut its outlook to "negative" from "stable" last year, denoting a one-in-three possibility of a ratings downgrade.

"Economic support has weakened somewhat," Kim Eng Tan, senior director of Asia-Pacific Sovereign Ratings said during a webcast about global ratings on Friday.

India's economic growth has slowed dramatically to just 4.5% in the October-December quarter of 2012 from more than 9% in early 2011.

Tan added that the revenue projections in the recent budget for the next fiscal year could pose "significant challenges" for the government, although he added it was not "entirely out of reach".

The budget for the fiscal year starting in April relies on a projected increase in revenue to fund a planned 16% rise in spending, while still intending to narrow the fiscal deficit to 4.8% of GDP from 5.2% in the current year.

However, some analysts have expressed concerns the budget may be too optimistic, especially about tax revenues, given the slowdown in economic growth.

"The economic conditions will have to remain relatively strong" for the government to meet its projections and meet its fiscal deficit targets, Tan said on Friday. — Reuters

Mumbai, March 15
Banks and other finanancial institutions have been advised by the Reserve Bank of India to consider issuing debit and credit cards with photographs of the cardholders to prevent misuse of stolen cards, the Lok Sabha was informed on Friday.

"Banks have been advised by the Reserve Bank of India that, with a view to reducing the instances of misuse of lost/stolen cards, they may consider issuing cards with photographs of the cardholders or any other advanced methods that may evolve from time to time," Minister of State for Finance Namo Narain Meena said.

He said in the written reply that as regards credit cards, banks have been advised by the central bank to also consider cards with PIN (personal identification number)and signature laminated cards or any other advanced methods.

To another query, Meena said that as on March 31, 2012, loans disbursed by state-owned banks to various power distribution companies amounted to Rs 1,37,191 crore and total NPAs (nonperforming assets) totalled Rs 6.98 crore. — PTI