According to media reports quoting sources on Thursday, the probe is being conducted by the Registrar of Companies in Mumbai and Nagpur where the Purti group of companies led by Gadkari are based and registered.
Corporate Affairs Minister M Veerappa Moily earlier said the Registrar of Companies (RoC) has been asked to send a report on the alleged source of funding of the Purti group of industries, set up by Gadkari in 2001.
On Tuesday Congress leader Digvijaya Singh continuing his tirade against Gadkari wrote a letter to Prime Minister Manmohan Singh, demanding an inquiry into his business deals and into the Purti group he is associated with by submitting "proofs”
He said a case against Gadkari prima facies exists and requested the PM to forward his letter to the Corporate Affairs Ministry for an inquiry by its Serious Fraud Investigation Office.
Meanwhile, the BJP top leaders rallied behind Gadkari.
In a statement, Leader of Opposition in Lok Sabha Sushma Swaraj said Nitin Gadkari has categorically stated that there is no wrongdoing and has offered himself for a probe and so "it is unjust and unfair to accept these allegations as true without a probe."
"We the members of BJP trust our President and stand firmly behind him," she said.
Party patriarch L K Advani congratulated Gadkari for asking for an inquiry against him.
"I have been keenly following the media reports on the monumental corruption by the ruling UPA which has made the political class hang its head in shame.
"But the UPA is trying to work a strategy to paint the entire political class with the same brush to minimise and escape its unpardonable sins. An off shoot of this is allegations of wrong doing against the opposition leaders -- an instance of which is the allegation against Shri Nitin Gadkari the BJP President," said Advani in a statement.
"This is more to neutralise the unprecedented charges against the ruling UPA. But I am of the view that the BJP should be different and should not claim immunity on either scale or nature of the allegations," said Advani.
"One of the allegations of wrong doing against Nitinji relating to land issue has been proved wrong according to media reports themselves. Next, on certain media allegations questioning investments in business enterprises Nitinji has come clean asking for an inquiry by the Department of Company Affairs. It is a fair and proper response. This shows the difference in the BJP's attitude," he said.
"It needs to be noted that the allegations are about standards of business and not misuse of power or corruption. The government also has said it will inquire. I hope that the government inquiry will be fair and the government will not use its political hostility to the BJP to colour the inquiry," said Advani.
But legal eagle and BJP senior leader Ram Jethmalani speaking to news channels said Gadkari should not be appointed as the chief of BJP for the second term in the light of the serious corruption charges.
He said Gadkari's association with the BJP will harm its campaign against corruption.
Rashtriya Swayamsevak Sangh (RSS), the ideological patron of BJP, chose to remain silent.
Its chief Mohan Bhagwat on Wednesday refused to comment on the graft charges against Gadkari and called it an 'internal matter' of the India's main opposition party.
"Gadkari issue is BJP's internal matter. We are not going to comment on it," Bhagwat said.
The UPA government said it is conducting a “discreet inquiry” to find out if any irregularities have been committed in companies formerly held by Gadkari.
Gadkari on Saturday last refuted the charges of using shell companies to fund his business and of receiving investments from contractors in Maharashtra.
Political opponents of the BJP chief had alleged that Gadkari's Purti group of companies accepted loans and investments from DP Mhaiskar, the founder of the Ideal Road Builders, which are quid pro quo.
Gadkari, denying the charges, told NDTV that he has not done any favours to Ideal Road Builders.
He said, "I can accept equity from anyone, there is nothing wrong. I am friends with Mr Mhaiskar and many contractors are my friends. Purti has losses of Rs 64 crores, Mhaiskar loaned me Rs 165 crores from his company, and I have repaid him Rs 64 crores."
The news channel had earlier reported that the companies that are named as the investors of Gadkari's company apparently did not exist.
Social activist turned politician Arvind Kejriwal accused Gadkari of having ties with Nationalist Congress Party (NCP) in Maharashtra to boost his business interests in Vidarbha region at the cost of poor farmers.
Gadkari opposing the charges said, this is an effort to politically malign him.
He said that his efforts were focused on helping farmers in Vidarbha.