Home / Politics / Policy /  Sahara’s Subrata Roy blames troubles on comment about Sonia Gandhi

Kolkata: Rarely do businessmen take on politicians anywhere in the world, but when the head of India’s biggest deposit-taking enterprise did so, he pointed his finger straight at one of the most powerful persons in the country—the chairperson of the ruling alliance at the Centre.

In a rare media interaction in Kolkata on Friday, Subrata Roy, the chairman of Sahara India Pariwar, said his conglomerate landed in trouble with the regulators because of his “emotional" comment about Congress chief Sonia Gandhi that only a person of Indian origin should become the country’s prime minister.

He expressed his reservation about Gandhi, because of her Italian origin, to top leaders of the Communist Party of India (Marxist) when the United Progressive Alliance (UPA) came to power in 2004 with the support of the Left parties, according to Roy. It appeared briefly at that time that Gandhi could become the prime minister but she declined to take the job.

Congress spokespersons couldn’t be contacted late on Friday for comment on the claim made by Roy.

Roy alleged that his publicly aired view about Gandhi earned his Sahara group the wrath of the Reserve Bank of India (RBI), which eventually forced it to wind down its deposit-taking business through so-called residuary non-banking finance companies. The central bank, though, had previously lauded the same business as “inclusive banking", Roy said.

Regulatory action notwithstanding, the Sahara Group continues to raise money from the underprivileged through co-operative societies.

In 2008, RBI ordered Sahara India Financial Corp. Ltd to stop mobilizing public deposits in a phased manner, asking it to repay everyone by 30 June 2015. The group found another way of raising public deposits—sale of convertible debentures (OFCDs)—but that, too, attracted the attention of another regulator though initially it had looked the other way, according to Roy.

Asked if Gandhi had personally not taken kindly to Roy’s views about her, he said it was more likely that the people around her took more offence than she herself. She had always been nice to him, he said, but quickly added that “we had the same finance minister at that time".

In June 2011, the Securities and Exchange Board of India (Sebi) ruled that the Sahara firms, which had sold convertible debt instruments, would have to refund investors with interest of 15% a year, though the stock market regulator had previously said unlisted companies were outside its jurisdiction. The unlisted firms that sold these securities had obtained the clearance of the registrar of companies.

The Sahara group had legally challenged all these regulatory interventions and could establish the legitimacy of its businesses in trial courts. But these favourable judgements resulted in key RBI and Sebi executives taking them as “personal defeats", Roy said.

They retaliated “very wrongfully" by escalating the attack on the Sahara group with the intention of driving it out of business. Sebi and the Sahara group are currently fighting a legal battle in the Supreme Court over the 2011 order.

It hasn’t, though, deterred Roy’s conglomerate from receiving public deposits. Through co-operative societies spread across India, the Sahara Group continues to receive up to 12,000 crore in fresh deposits every year, Roy said, adding that they owe their so-called members 30,000-35,000 crore. Despite unyielding regulatory pressure on the Sahara group, its public deposits have grown, he claimed.

The group’s total indebtedness is at 40,000-45,000 crore, which include mostly foreign currency debt, apart from public deposits. Compared with that, the group owns assets worth 1.5 trillion, mostly in the form of real estate—land, townships and hotels—according to Roy.

The other key reason for the Sahara group’s facing persistent persecution, he said, was the success of a first generation entrepreneur. In India, he said, the establishment was not supportive of first generation entrepreneurs—one could only rise without facing impediments if he/she was somebody’s child—whereas in one lifetime, he was looking to build in 8-10 years from now a business empire generating 18 trillion in annual revenues.

Asked about succession plans, Roy, 65, said he had made it clear to his sons that “nobody will become profit-taking owner" of the group, which will be run, after him, by a trust of 50-60 people. The trust is already in the making—some people have already been inducted, he said, adding that it would include people who had risen through the ranks from the grass roots.

Asked about the ongoing spat with Sebi, Roy said his Sahara group would seek the clearance of the apex court to submit title deeds of some of its properties directly with a nationalized bank, instead of with Sebi, so that it could hold them as a trustee. There have been differences between the Sahara group and the market regulator over the valuation of assets.

Sahara has filed a defamation case in a Patna court against Mint’s editor and some reporters over the newspaper’s coverage of the company’s dispute with Sebi. Mint is contesting the case.

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