Government demands probe into lapse in PFS

For investigation under Section 206 of the Companies Act, the officers and directors of the company will have to give information about the alleged lapses. Based on the outcome of the investigation, the ministry will decide whether a deeper investigation is needed, the person said, requesting anonymity.

PTC India Financial Services, a non-banking financial company promoted by country’s largest power trader PTC India, recently hit the news after three independent directors resigned, alleging “instances of serious default in corporate governance”. . This prompted the Securities and Exchange Board. of India (SEBI) to direct the company to address all the issues raised by the directors and submit an action taken report.

In addition, Rakesh Kakar, a former bureaucrat, stepped down as an independent director from the board of PTC India citing corporate mismanagement in NBFCs.

PFS earlier this week told stock exchanges that it has submitted a point-by-point report to the market regulator. The ROC investigation will also seek to assess the damage caused to the interests of shareholders including minority shareholders and other stakeholders including lenders. Developments in the non-bank lender have delayed its earnings declaration for the December quarter. Now it is awaiting SEBI’s nod for the board meeting.

While SEBI oversees the compliance of all listed firms and the regulatory requirements applicable to them, the Ministry of Corporate Affairs oversees the compliance of the Companies Act and the rules under it.

“We have not received any fresh query from MCA and we are not getting the same. We are dedicated to the highest standards of corporate governance and prioritize the interests of our stakeholders. The company strives to deliver ethical best practices along with comprehensive transparency,” PFS said in a statement. PTC India was established as a public-private initiative in 1999. Four state-run firms- National Hydroelectric Power Corp, NTPC, Power Grid Corp and Power Finance Corp are the promoters of PTC India with 16.2 per cent stake.

Emails sent to the MCA spokesperson early Friday did not elicit any response.

The inquiry will enable the government to decide whether the affairs of the firm are satisfactory and legally compliant. If it notices discrepancies, an inspection of the books of account may be ordered. The law also provides for an in-depth investigation based on the gravity of any violation, as explained by the person cited above.

In November, the Union power ministry asked the disputed PFS and PTC India Ltd to comply with the Reserve Bank of India’s (RBI) risk assessment report and reverse decisions “affecting proper corporate governance”, as Mint previously reported. Was.

Earlier in a press conference, PTC India Chairman and Managing Director Rajiv K. Mishra termed the allegations leveled by three independent directors of PFS as an attempt to “defame” the company and questioned the timing and intention behind the resignations.

“Except for very large family-owned businesses, independent directors play important and meaningful roles in 80% of companies. They are more vocal today, and many people are becoming very picky about accepting assignments,” says Manoj Raut , Chief Executive Officer and General Secretary of the Institute of Directors, an apex professional association for directors in India.