Sahara Group's run-in with Securities and Exchange Board of India (SEBI) continues with SEBI now issuing a notice to cancel the certificate of registration of Sahara Mutual Fund as it is no longer a ‘fit and proper' company to do mutual funds business.
It has ordered transfer of its operations to another fund house in five months and return the certificate of registration to SEBI within six months.
Sahara MF had average assets under management of Rs 134.3 crore ($21 million) in the April-June 2015 quarter, as per data collated by mutual funds industry body AMFI.
Typically deals in the MF industry are struck at 2-5 per cent of assets. This means, Sahara MFs asset sale could fetch around Rs 2-10 crore.
In February, the regulator had rejected Sahara Asset Management Co's application to renew its registration, saying it was unfit to stay in the business.
Sahara has been prohibited to accept any fresh subscription from investors.
According to the SEBI order, if the company fails to complete the asset transfer process to another asset manager within the limited time period then Sahara Mutual Fund should compulsorily redeem the units allotted to its investors and credit the respective funds to its investors, without any additional cost, within a period of 30 days thereafter and wind up the operations of the mutual fund house.
Sahara Group had come under SEBI scanner when it found that its housing finance company had raised public deposits illegally. Sahara promoter Subrata Roy has been in jail for more than a year as SEBI dragged the group to the Supreme Court over its failure to return money to the depositors. The group has been asked to shell out a big deposit and arrange for funds through assets sales to secure a bail for Roy.