By Ayanjit Sen
BBC Delhi bureau
Dalmiya's Calcutta-based faction lost office last November
The Board of Control for Cricket in India is to launch an inquiry into its former president Jagmohan Dalmiya.
He has been asked to explain his handling of the board's funds during his period in charge and has been given a week to reply.
Some of the issues date back to the 1996 Cricket World Cup, a tournament co-hosted by India, Pakistan and winners Sri Lanka.
But Dalmiya told the BBC the charges levelled against him were baseless.
He was the most powerful man in Indian cricket for two decades, and helped the board become the world's richest sporting body.
Dalmiya stepped down as president in 2004 but used his vote to ensure his chosen candidate, Ranbir Singh Mahendra, succeeded him.
Mahendra's term of office lasted only one year and he was ousted by rival Sharad Pawar last November.
Pawar's choice as treasurer, N Srinivasan, said Dalmiya had been asked to furnish all details regarding the board's bank accounts.
"It is a matter of grave concern and some action has to be taken. The process and timing of the action is to be decided by the board president," he added.
Lalit Modi, vice-president of the Board, went further, claiming alleged misuse of funds pertaining to the 1996 World Cup "may run to millions of dollars".
The BBC has seen a copy of an internal note prepared by the board which states that accountants reported various amounts of money being withdrawn for which there were no proper supporting documents.
But in response, Dalmiya claims some of the current board members are trying to malign him.
He has promised to give a detailed response to the allegations in due course.