Fintech startup BharatPe received fresh notice from The Ministry of Corporate Affairs (MCA) under section 206 of the Companies Act asking for information about legal proceedings initiated by the company against it’s founder Ashneer Grover.
The Ministry is inquiring about the findings in a status report filed by the Delhi Police’s Economic Offences Wing over alleged financial irregularities at the company.
The notice was issued by the Registrar of Companies, an arm of the ministry under section 206 of the Companies Act, it pertains to an inquiry dating back the year 2022, the report affirmed.
In 2022, BharatPe, faced increased scrutiny from the Ministry of Corporate Affairs (MCA) regarding it’s internal governance, investment strategies and stock option allocations to independent directors, notably including former State Bank of India Chief Rajnish Kumar.
This regulatory focus coincided with a broader trend of heightened government oversight on fintech companies concerning compliance and internal governance practices.
BharatPe’s competitor, Paytm encountered significant challenges following the Reserve Bank of India’s directive to it’s payments bank subsidiary, restricting it from accepting deposits, offering credit services or facilitating fund transfers beyond February 29.
The fintech responded to the MCA’s inquiries by affirming it’s cooperation with authorities and acknowledging ongoing initiated in 2022 after an internal governance review. The company highlighted it’s commitment to providing the requested information, as outlined in it’s audited results.
The controversy surrounding BharatPe escalated earlier in 2022 when its founder faced allegations of using inappropriate language and allegedly threatening a Kotak Group employee for failing to secure an allotment in the Nykaa IPO.
Subsequently, the founder resigned from his position as a managing director, prompting BharatPe to initiate a forensic audit to its financial practices during his tenure.
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