Good conduct must match success – The Financial Express

Clipped from: https://www.financialexpress.com/opinion/good-conduct-must-match-success/2404170/

Regulators must take notice of both the Grover and Paytm episodes and act

That the co-founder of a unicorn should have stooped to the level of—allegedly—abusing an employee of Kotak Mahindra Bank (KMB) and threatened him is quite unbelievable. Reserve Bank of India (RBI), which has handed BharatPe and Centrum Financial, a licence for a bank, should take note of this and, perhaps, even reconsider its offer.One wants to believe there was no altercation in the first place.That the co-founder of a unicorn should have stooped to the level of—allegedly—abusing an employee of Kotak Mahindra Bank (KMB) and threatened him is quite unbelievable. Reserve Bank of India (RBI), which has handed BharatPe and Centrum Financial, a licence for a bank, should take note of this and, perhaps, even reconsider its offer.One wants to believe there was no altercation in the first place.

It may be true the country is doing well in the innovation sweepstakes due to the proliferation and performance of start-ups, as commerce minister Piyush Goyal observed at the inauguration of the Startup India Innovation Week on Monday. India’s rank has jumped several notches—from 76 in 2014 to 46 last year—in the Global Innovation Index, and that is truly creditable and in big part due to the work done by start-ups.

 It is unfortunate, though, the occasion should have been marred by two unrelated incidents. The first is the alleged bad behaviour of Ashneer Grover, co-founder of BharatPe, and the second is the crash in the price of the Paytm stock on Monday to a new 52-week low of Rs 1,151, around half the IPO price of Rs 2,150.But first the Grover episode.

That the co-founder of a unicorn should have stooped to the level of—allegedly—abusing an employee of Kotak Mahindra Bank (KMB) and threatened him is quite unbelievable. Reserve Bank of India (RBI), which has handed BharatPe and Centrum Financial, a licence for a bank, should take note of this and, perhaps, even reconsider its offer.One wants to believe there was no altercation in the first place.

In a tweet that was later deleted, Grover claimed an audio clip of his talk with the KMB employee was a fake put up by a person looking to extort money from him. The truth will likely unfold in the course of the legal battle since KMB has said it will take legal recourse. If indeed Grover did hurl abuses at a hapless executive, he needs to be taken to task.This may be the done thing in the fintech world, where coercive measures are reportedly being used to recover money from borrowers. But India’s financial system, with all its weaknesses, follows some rules and regulations. And some decorum. It is unfortunate Grover shot off a legal notice to KMB for failing to loan him and his spouse Rs 250 crore each so they could participate in the Nykaa IPO.

The move smacks of arrogance. Founders of start-ups may be very smart, especially at burning cash for years on end without making a single penny, but they need to come off their high horses. It is unfortunate the media is encouraging such brash behaviour; founders of start-ups that have flopped, and flopped again, are being feted as though they have built Infosys.CEOs cannot afford to be brash and arrogant. Vijay Shekhar Sharma, founder of One97 Communications, has been saying repeatedly, since the Paytm IPO made a poor debut on the bourses, that no one understands the business and that the valuations are justified.

Please, Mr. Sharma, do not insult our intelligence. Not everyone is a whiz kid, but neither is everyone a fool and those questioning the business model deserve to be treated with respect. You may brush aside relevant queries but that won’t help the stock price. Analysts at Macquarie have pointed out Paytm’s leadership in the wallets space is slowly becoming irrelevant, thanks to the exponential growth in UPI payments.

The brokerage now believes the shares are not worth more than `900 apiece. While investors—large and small—are responsible for their decisions and cannot not blame anyone other than themselves for getting carried away, SEBI nonetheless needs to examine the issue. It could perhaps insist on some degree of profitability, and profits, before an IPO.

The fact is that as much as digital businesses have tremendous potential to grow, they are also vulnerable to rapid technological changes. And with capital in abundance, entry barriers are now lower. So, while no one is grudging start-ups their bragging rights, or their bank balances, they do need to behave.mail logo

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