Tussle between Kotak Bank and BharatPe’s Ashneer Grover Takes Ugly Turn; Raises Larger Questions
Moneylife Digital Team 10 January 2022
The tussle between BharatPe’s co-founder and managing director (MD) Ashneer Grover and Kotak Mahindra Bank is taking a new turn. On Sunday afternoon, a legal notice by Mr Grover to Uday Kotak and seniors in the Bank suddenly appeared on social media and in-boxes of journalists. It turns out that the ugly spat on social media, including an audio recording that has been making news in the past weeks, goes back to at least 31 October 2021, the date of Mr Grover’s legal notice to Kotak Bank. Last evening, the Bank put out a brief statement that said: “This notice was received by us and was replied to appropriately at the time, including placing on record our objections to inappropriate language used by Mr Grover”. It further says, “Appropriate legal action is being pursued. We would like to confirm that there is no breach or violation by the Kotak Group in any manner whatsoever.”
 
However, the issue raises several questions that we have asked both sides to respond to (if they do), but here is the background to the spat. 
 
Last week, an audio clip surfaced on social media where a couple is speaking to someone who appears to be a Bank employee. The male voice hurls abuses and the other male voice is heard pacifying him. It was claimed that the voices were those of Ashneer Grover and his wife and the employee was from Kotak Mahindra Bank. Even as the clip went viral, especially since Mr Grover is a celebrity due to his appearance on a popular television show called Shark Tank, two things happened.  Mr Grover denied the same calling the tape 'fake' and speaking about extortion attempts. Soon after, he deleted the clip and the audio clip is no longer available on Soundcloud from where it was uploaded and tweeted by @BabuBongo. 
 
 
On 7 January 2022, someone with a Twitter handle of @Korporatekumar had tweeted the alleged audio clip. 
 
 
Mr Grover and his wife Madhuri Grover had sent a legal notice to Kotak Mahindra Bank’s managing director and chief executive officer (CEO) Uday Kotak and some senior executives, accusing the Bank of failing to secure financing and allocation of shares in the initial public issue (IPO) of FSN E-Commerce Ventures Ltd (Nykaa).
 
The notice sent on 30 October 2021 had sought damages for the gains Mr Grover and his wife would have made after subscribing to shares worth Rs500 crore in the company besides Rs1 lakh towards the cost of the legal notice.
 
According to the notice, Mr Grover has earlier availed Kotak Bank’s Wealth Management Services for IPO financing of Rs100 crore each for the IPOs of Zomato and CarTrade. He and his wife wanted to apply for shares worth Rs250 crore each in the Nykaa IPO.  It may be recalled that the Nykaa IPO opened for subscription on 28 October 2021; according to the notice, on the same day, Kotak Mahindra Bank informed the Grovers that the subscription formalities for the Nykaa IPO on their behalf were done. 
 
“However, to the shock and surprise of our clients, on 28 October 2021, after having repeatedly assured our clients that the shares of FSN would be allotted to them, Kotak informed our clients that it would not be able to provide IPO financing for the Nykaa IPO. Kotak’s refusal to comply with its assurances was on the pretext that it had decided not to finance the Nykaa IPO due to ‘erratic FII movements’ and ‘very high lending rates’,” says the notice.
 
“In the event of Kotak’s failure to do so, Kotak would be liable to compensate our clients for the losses suffered on account of Kotak’s breaches, i.e. the gains our client would have made through the Nykaa IPO, by submitting an application of Rs500 crore in the high-network individual (HNI) segment, less the cost of borrowing computed at 10% for seven days,” the notice says.
 
“Kotak is called upon to compute this amount on the listing of Nykaa and promptly pay this sum to our clients within 24 hours of listing of Nykaa stocks. Kotak is also liable to pay the costs of this legal notice in the sum of Rs1 lakh. Kotak’s failure to comply with its obligations would compel our clients to take the necessary action in law.”
 
Besides Mr Kotak, the notice was also addressed to Oisharya Das, CEO of Kotak Wealth Management, Shanti Ekambaram, Kotak Mahindra Bank’s group president for consumer banking and KVS Manian, corporate, institutional and investment banking.
 
Here are the questions we have asked the Bank: 1. Why would a Kotak Bank employee tape and publicly humiliate a wealth management client? (We understand the person is no longer employed by the Bank but the Bank has not confirmed it. 2) Kotak Bank correctly objects to “inappropriate and objectional language” allegedly used by Mr Grover (thereby indirectly confirming the recording) isn’t it a fact that recovery agents employed by banks use far more abusive language and threats in their dealings with borrowers? Can the Bank take a high moral ground vis-à-vis its employee while it is open season for abusing customers even when there are genuine reasons for payment delays? 3) Does the recording indicate that all client calls are being recorded by Kotak employees? In which case, can clients demand the recordings when they fight the Bank in cases of mis-selling of products? After all, it cannot be a one-way street for recordings to be used only for the Bank’s defence. 
 
There are several holes in Mr Grover’s actions too and we would update this article on hearing from both parties. 
 
Responding to Moneylife's email, BharatPe says, "We do not have any comments on this matter."
Comments
sideonsid
1 week ago
One question to MoneyLife , Nykaa was oversubscribed by over 100 times and Grover sought financing for Rs.500 Cr. Does that mean he would have been allotted only shares worth Rs.5 Crores (approx).
Or is there any other method where he would have managed to secure a much higher allotment ?
skchowdaryv
2 weeks ago
Corporates usually inform prior that they record for quality purposes, but releasing them in public and using against customer is a more serious issue.
Banks usually get most of their business with verbal tactics, it looks like Mr.Grover's agony is the result of the said bank's failed verbal promises.
raaajan03
2 weeks ago
Rather surprised by this article. Is Moneylife justifying the crude and boorish language used by Grover including threat to murder someone. And more so at RBI which has chosen a person of Grover's nature and attitude to award a banking licence where several others much better qualified did not get.
sucheta
Replied to raaajan03 comment 2 weeks ago
Rather surprised at how you have arrived at such a strange conclusion... we are aware of how things are gamed in the digital medium but we are shocked at how 3 comments from people who are ostensibly bank customers are totally focused on the last paragraph alone and giving it a deliberate twist. And you claim to be "surprised" by the entire article on account of ONE line?
m.muralidharan
Replied to sucheta comment 5 days ago
Well said.
sha79
2 weeks ago
Thanks to ML team for highlighting this incident.

"isn’t it a fact that recovery agents employed by banks use far more abusive language and threats in their dealings with borrowers? " Why is this question posted in this article?

Even if the answer for this question is Yes (the article seems to ask, not answer), is it Yes for all loan collection calls, all over India? Is it Yes for Kotak bank branches alone? Does an 'Yes' answer to this question somehow in any way justify abusing a bank employee who is not a loan collection agent?

This question is irrelevant to the article and the conversation that happened involving Mr Ashneer Grover and the other person.

If there are facts about collection agents using abusive language, I request ML team to report those in more such articles in the future.
sucheta
Replied to sha79 comment 2 weeks ago
Moneylife has written about recovery tactics often enough and we think this dangerous practice of taping customers and using it on social media (whether or NOT customers are boorish and abusive) is a serious matter. Especially when these tapes are never available to customers for defending themselves or making representations to the banking ombudsman when there are cases of gross misselling by relationship managers. This applies to Kotak also. If you have never experienced it, you are indeed fortunate. At Moneylife Foundation -- whose activities you may care to look up if you are genuinely a concerned reader -- you will see plenty of evidence of what customers face and how one-sided are bank dealings.
satishmg
2 weeks ago
My personal experience with Kotak is that they change things unilaterally and do not honor their own words. I was told that if I buy 20 gms of gold, my sb a/c would be zero balance and then started putting aqb charges.
sudhanayak105
Replied to satishmg comment 2 weeks ago
yes its a fact
mohittandon3131
2 weeks ago
First and foremost the langauge used by Mr Grover is highly deregotary and is uncalled for from a person of his his stature and secondly if Kotak Bank has taken decision to not finance the IPO then the poor employee could not have done anything in this. Mr Grover should have taken this matter with higher ups rather then abusing the relationship manager.
sucheta
Replied to mohittandon3131 comment 2 weeks ago
Have you missed the very purpose of the article ? Which is that Grover (whose language we simply do not condone or defend) , had in fact take up the matter, not just with "higher up" as you call them, but by sending a legal notice on 31st October. The audio surfaced in January. Kotak Bank has not answered our queries about whether or not the wealth manager has been sacked (we understand he has) or what exactly he had promised Grover, or why funding that was advanced twice earlier was refused this time. So you seem to know more than what we have officially found out by sending emails to "higher-ups" in Kotak. By the way, Grover has refused to answer queries.
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