The Reserve Bank of India (RBI) is monitoring the recent cases related to BharatPe. It wants to know whether there has been any violation of corporate governance norms and whether it will have any impact on the norms set for promoters of banks. Actually, BharatPe is included in the promoters of Unity Small Finance Bank (Unity SFB). Two people with knowledge of the matter have given this information.
Trouble started for BharatPe when an audio clip of Ashneer Grover surfaced. Ashneer Grover is the co-founder of BharatPe. In this audio, Grover is abusing an employee of Kotak Mahindra. He is angry with Kotak because he had diverted his (Grover) investment in the IPO of Nykaa Company.
Grover, 39, has called this audio clip fake. But, the matter has become controversial after the demand of Grover’s compensation from Kotak Mahindra Bank boss Uday Kotak. Kotak Mahindra Bank has accused Grover of abusing and threatening its employees. Grover was sent on leave for three months after the matter caught fire. After this his wife was also thrown out of the company.
Risk advisory firm Alvarez & Marshall (A&M) has submitted a report to the board of BharatPe. In this, information about operational issues and financial scams in BharatPe has been given. It indicates two types of losses. The first is related to recruitment. The second is related to payments to vendors who do not even exist. The report said that it is not understood why the company was buying from vendors who were not actually there. Also why the company failed to provide proof of delivery of the items. A&M has called for a comprehensive inquiry into the matter. Moneycontrol has seen this report.
A source privy to the matter said, “The central bank has set a number of criteria along with fit and proper. This includes past performance, capital preparedness etc. It is necessary to adhere to high standards of corporate governance norms. RBI is the reason why. Trying to find out after the recent cases whether there has been a breach of corporate governance in this.”
Another source said that the job of the RBI is to protect the interests of the depositors. “Therefore, the central bank keeps a close watch on the financial position and corporate governance of the promoters of humation banks. In this case also RBI is looking into these things,” he said. Both the sources told these things to Moneycontrol on condition of anonymity.
On June 18 last year, the RBI had approved Centrum Financial Services to merge with BharatPe into a small finance bank. This partnership came into existence on January 25 this year when the RBI and the government allowed Unity SFB to merge with PMC Bank itself. There was a big scam in PMC Bank in 2019. After the scam, many of its depositors had committed suicide.
If RBI finds evidence of breach of corporate governance in BharatPe, it may stall the process of merger of PMC Bank with Unity SFB. This will be a big blow to BharatPe as well as Centrum Group.
Read also: Evidence of recruitment fraud found in BharatPe, crores were paid to fake firms
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