Fino Payments Bank MD Arrested Under GST Act; CFO Takes Interim Charge

BANKINGFINANCE
Whalesbook Logo
AuthorSatyam Jha|Published at:
Fino Payments Bank MD Arrested Under GST Act; CFO Takes Interim Charge
Overview

Fino Payments Bank's Managing Director & CEO, Rishi Gupta, was arrested on February 27, 2026, under the provisions of the CGST and SGST Act. The bank stated the investigation relates to business partners and not its direct GST compliance. Chief Financial Officer Ketan Merchant has been appointed interim head to manage daily operations. The bank assures no immediate impact.

Fino Payments Bank MD & CEO Arrested Under GST Act; CFO Takes Interim Charge

Fino Payments Bank's Managing Director & CEO, Rishi Gupta, was arrested on February 27, 2026, under the provisions of the CGST and SGST Act. Chief Financial Officer Ketan Merchant appointed interim head.

What just happened (today’s filing)

Fino Payments Bank announced that its Managing Director and CEO, Mr. Rishi Gupta, was arrested on February 27, 2026. The arrest was made under the provisions of the Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) Act.

The bank clarified that the investigation reportedly relates to business partners of the Bank and not its own GST compliance. A board meeting was convened on the same day, concluding at 7:06 p.m. IST.

In response to Mr. Gupta's absence, the Bank's Chief Financial Officer, Mr. Ketan Merchant, has been appointed as the interim Head to manage day-to-day operations, pending further board decisions or Mr. Gupta's resumption.

Why this matters

The arrest of a top executive, especially the CEO, can raise immediate concerns about leadership stability and governance for any financial institution. For a payments bank like Fino, which operates in a highly regulated environment and is transitioning to a Small Finance Bank, such events can impact investor confidence and operational continuity.

While the bank has asserted that there is no immediate impact, the ongoing investigation involving business partners could potentially escalate or lead to unforeseen financial or regulatory challenges if not managed effectively.

The backstory (grounded)

Fino Payments Bank, known for its 'phygital' approach serving India's mass market, went public with its IPO in November 2021. The bank has been actively pursuing a conversion into a Small Finance Bank (SFB), receiving in-principle approval from the RBI, a significant first for a payments bank.

This development follows a GST search at its registered office in November 2025. Additionally, the bank has faced regulatory penalties, including a Rs 29.6 lakh fine from the RBI in June 2025 for exceeding balance limits and a Rs 5 lakh fine from FIU-IND in January 2024 for compliance lapses. Concerns about corporate governance lapses were also flagged by insiders in May 2022.

Interestingly, Mr. Rishi Gupta had recently received board approval for his re-appointment as MD & CEO for a three-year term starting May 2026, subject to shareholder and RBI approvals.

What changes now

  • Interim Leadership: Mr. Ketan Merchant, the CFO, will oversee daily operations, ensuring business continuity.
  • Governance Focus: The board and management will need to navigate the current situation while managing the planned transition to an SFB.
  • Operational Management: Efforts will be made to maintain normal business activities despite the absence of the MD & CEO.

Risks to watch

  • Investigation Fallout: The ongoing GST investigation, even if related to business partners, could uncover deeper issues or lead to reputational damage.
  • Regulatory Scrutiny: Regulatory bodies like the RBI and GST authorities will likely maintain a close watch on the situation and the bank's compliance measures.
  • Investor Confidence: Any prolonged leadership vacuum or negative developments could impact investor sentiment and the bank's stock performance.
  • SFB Transition: The arrest could potentially slow down or complicate the planned conversion to a Small Finance Bank.

Peer comparison

Fino Payments Bank operates in the competitive payments bank space alongside players like Airtel Payments Bank, India Post Payments Bank, and Jio Payments Bank, all aiming for financial inclusion. Competitors like Paytm Payments Bank have faced significant regulatory challenges, including RBI restrictions and SEBI warnings, highlighting the stringent compliance environment for fintech and payment entities in India.

Context metrics (time-bound)

  • As of Q3 FY26, Fino Payments Bank's revenue from operations was Rs 394 crore, a 15% year-on-year decline, though EBITDA margins increased by 320 bps to 16.2%.
  • Average deposits stood at Rs 2,496 crore in Q3 FY26, a 32% increase from Q3 FY25.
  • The bank had approximately 1.43 crore customers by FY25, with a target of 3.26 crore by FY30.

What to track next

  • Investigation Updates: Monitor any further developments or disclosures regarding the GST investigation and its outcome.
  • Interim Management Effectiveness: Observe how Mr. Ketan Merchant manages operations and communicates with stakeholders.
  • Board and Shareholder Actions: Track any resolutions or decisions made by the board concerning leadership and the ongoing situation.
  • Regulatory Responses: Stay informed about any statements or actions from the RBI or GST authorities.
  • SFB Conversion Progress: Updates on the timeline and process for becoming a Small Finance Bank amidst these developments.
Disclaimer:This content is for educational and informational purposes only and does not constitute investment, financial, or trading advice, nor a recommendation to buy or sell any securities. Readers should consult a SEBI-registered advisor before making investment decisions, as markets involve risk and past performance does not guarantee future results. The publisher and authors accept no liability for any losses. Some content may be AI-generated and may contain errors; accuracy and completeness are not guaranteed. Views expressed do not reflect the publication’s editorial stance.