Groww Issues 6-Point Rebuttal To Allay Fears Of Alleged Customer Frauds

Accused of “fraud” by multiple customers in the past few days, fintech platform Groww has now issued a six-point clarification to allay fears of its users. In a post on X, Groww reassured all its customers that their investments on the platform are “safe”. 

“…In all of this one thing that is always secure is the customers’ money and the units. While reports can be delayed or incorrect, the money and units will always be safe,” added Groww. 

Slamming allegations that it failed to invest a customer’s money, Groww said that the SIP instalment of a user was “inadvertently” updated to a value of INR 50,000 due to issues with data ingested from registrar and transfer agent (RTA). Groww claimed to have received a record for some other transaction not linked to said user but with the same transaction ID. 

“When we processed this file, the customer’s original instalment… got inadvertently updated to a value of INR 50,000. This resulted in an increased invested value and units shown to the customer in her portfolio on the app, which was corrected later. This additional amount was neither debited to the customer and nor did Groww fail to invest it,” said the fintech unicorn. 

The case pertains to a now-deleted social media post last month where a customer’s relative alleged that her sister faced fraud after investing via the platform. The user, Hanendra Pratap Singh, alleged that the platform deducted money from his account without actually investing it in a mutual fund scheme, adding that Groww allegedly generated a false folio number that did not exist.

Later on, the company said that the user never made the said investment and no money was deducted from her bank account. Groww also credited the claimed amount back to Singh’s account as a gesture of “good faith”.

Responding to posts online that said that Groww refunded the amount because the app was liable, the company clarified that the amount was sent to the customer only to allay fears of the users, adding that no money was debited from the customer’s account. 

In another rebuttal, the fintech major also refuted allegations that it kept a customer’s money and did not forward the money to the mutual fund company. Elaborating on this, Groww claimed that all payments received in lieu of mutual funds transactions go straight to BSE’s clearing house, ICCL, and not the company. 

“Specific to the customer query, back in 2020, their SIP was linked to the exchange as a biller, where the money went directly from the bank of the customer to the exchange. In this instance, the amount that the customer was claiming was not received by BSE, which is what has been confirmed by BSE to us…,” added Groww. 

Reacting to the allegations that Groww created a fake folio for a user and then deleted it, the startup said that it does not create any folio numbers, adding that all folios are created by the fund house or RTAs. 

“The customer was seeing a different entry which was folio details of another transaction. This folio did not belong to that customer. There was no debit from the customer’s account. When the issue was flagged to us, we reconciled the entry, found the issue with the duplicate Order ID handling and revised the customer’s folio,” added the fintech major. 

The investment tech major also claimed that there was “no single problem affecting a large base” and attributed the discrepancies on a user dashboard to transactions made on some other platform that may not have been tracked or updated in real-time on the Groww app. 

“Groww serves more than 1.5 crore customers across the country. Organisations of our scale receive customer queries on social media, and we address them promptly to our customers’ satisfaction…,” claimed the company. 

Meanwhile, the platform also directed users to verify their holdings both with CAMS and KFintech to validate their portfolios. 

The clarification came just a day before Groww AMC and Groww Trustee paid INR 9 Lakh to SEBI to settle enforcement proceedings that may be initiated against them for the violation of a SEBI circular. As per the watchdog, the company (then India bulls AMC) paid certain scheme related expenses from its pocket between April 1, 2020 to March 31, 2022, which should ideally have been paid from the schemes. 

It is pertinent to note that Groww completed the acquisition of Indiabulls Asset Management in May 2023 for a consideration of INR 175.6 Cr.

Despite the challenges, Groww has scaled up heavily in the past one year. The startup returned to the black with a net profit of INR 449 Cr in the fiscal year ended March 2023 (FY23) while operating revenue tripled year-on-year (YoY) to INR INR 1,227.8 Cr in the period under review.