The Enforcement Directorate is all set to issue a show cause notice to Sahara for a Rs 3525 crore-FEMA violation. ED has been probing Sahara's Grosvenor Hotel buy for over a year, now. Sahara had acquired the posh London hotel in December 2010 for £470million equivalent to Rs 3525 crore.

The money for this acquisition was taken from Sahara India Real Estate Corporation Ltd (SIRECL) and Sahara India Commercial Corporation Ltd, both companies are banned by SEBI, making this transaction a gross violation of FEMA as per a report in ET.

In the thick of this entire transaction and foreign exchange violation is Axis Bank. ED alleges that Axis Bank did no due diligence before remitting Rs 3525cr on behalf of Sahara. ED is of the view that KYC or Know Your Customer procedures were also not carried out properly by Axis Bank. All these evidences have led ED to write to RBI suggesting that the Axis Bank branch that remitted the Sahara money should be suspended.

Sahara via Axis Bank remitted the entire amount for acquiring Grosvenor House through the automatic route. While the arms of the Group that remitted the money have been banned by SEBI, making the entire transaction a violation of FEMA regulations.

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