Last week, the ongoing crisis in BharatPe took a dramatic turn when Rajnish Kumar, former SBI chief and current chairman of the fintech firm's board, came down heavily on company co-founder Ashneer Grover. Kumar said Grover should have shown more maturity in the whole episode and alleged that Grover’s strategy is to make a case that governance review is biased against him.
“I agree that Ashneer should have shown maturity (in the BharatPe episode)… The whole strategy of Ashneer is to make out a case that the governance review is biased against him. He is creating documentation for that, nothing else,” Kumar told Moneycontrol on February 23 in an exclusive conversation. The board is prepared to take action if governance issues are found in the audit reports, he said.
For the uninitiated, BharatPe is a payments company that services shop owners with QR codes. The current crisis pertains to alleged corporate governance lapses and a bitter internal tussle between Grover and the board.
Weeks after the rant, Grover went on leave after which his wife Madhuri Jain Grover, too, went on leave. But, this isn’t only about Grover. Although the current round of problems at BharatPe began when an audio clip was leaked that apparently showed Grover using abusive language against a bank employee, the issue soon developed into larger corporate governance issues.
Reports have emerged about serious corporate governance lapses that pertain to the creation of fake payment invoices to consultants and certain dubious payments to consultants.
A letter from Grover to the board of Resilient Innovations, the parent of BharatPe, on February 22, alleged that another co-founder Bhavik Koladiya had called him and asked to meet at a location without sharing an agenda. He claimed that Kumar was also with him when the call came. Grover accused Kumar of being biased and prejudiced and Koladiya of being abusive. He stated that he reserves the right to take appropriate legal action.
Kumar has maintained that Grover’s letter won't have any impact on the company and its board is aligned with action. “No impact on the company and me. The company will emerge stronger. The board is completely aligned to what needs to be done,” said the veteran banker.
Though the BharatPe board chairman has assured that the company will emerge out of the crisis, ongoing public exchanges indicate certain deeper issues with the firm.
There isn’t any clarity yet on the facts of the case. Both sides (Grover and BharatPe board) have levelled allegations and counter allegations.
BharatPe must put its house in order at the earliest.
Clarity on this is vital in the interest of the PMC Bank case as well where many depositors are awaiting resolution. BharatPe is the joint venture partner of Centrum in Unity Small Finance Bank which has absorbed PMC Bank.
The PMC Bank crisis itself is an outcome of years-long fraud and major corporate governance violations. Against that backdrop, logically the rescuers of PMC Bank are supposed to have a strong track record and corporate governance structure, so that customers of PMC Bank feel confident. Centrum has asserted that the developments at BharatPe will not have any bearing on Unity Small Finance Bank. But that assurance isn’t enough. BharatPe must put its house in order.
(Banking Central is a weekly column that keeps a close watch and connects the dots about the sector's most important events for readers.)