Groups like Sahara, which operate on the edge of the law, have to be shown the door if confidence in the Indian financial sector has to grow. The group, which has been accused of running Ponzi-like sc hemes, has come into trouble with every regulator, from the Reserve Bank of India to Sebi, and even the Registrar of Companies. The key question is: how many of the group's investors are real and how many non-existent? Both Sebi and the Supreme Court have observed that at least some of the investors in two Sahara companies seem fictitious. The other source of worry is the huge amounts the group is able to pour into cash-guzzling sponsorships like cricket or Formula One racing. Though Subrata Roy Sahara has denied his group deals with any kind of benami money, the tendency to create a huge web of opaque companies in the private sphere suggests that it prefers to operate from the shadows. The Supreme Court has done the right thing by asking the group to wind down its dubious money circulation schemes, but bolder action is called for to disentangle the web of companies that may have much to hide. There is a strong case for instituting a special SIT to uncover all the activities the group is involved in. Only the legitimate parts should be allowed to continue.
While seeking a wind-up of Sahara, one has to also consider the raison d'etre of such firms. The fact that Sahara's OFCDs attracted 3 crore investors shows that there is definitely a market hungry for such products. There is no point in blaming Sahara, or any other such company for that matter, for tapping into a hungry market, which is largely ignored by banks, mutual funds and other financial institutions. Also, one can't deny the fact that such companies are creating thousands of jobs. So Subarata Roy's complaint that he has been hounded by various authorities over the past seven-eight years for doing good work has to be looked at with sympathy. Instead of winding up such companies, the government should be able widen its regulatory ambit to include these companies.