Fino Payments Bank MD & CEO arrest: Officials state lender operationally stable, GST evasion by certain programme managers
Fino Payments Bank doesn't foresee any financial liability, and feels the matter is unlikely to have impact on plans to convert to small finance bank.
- Mar 2, 2026,
- Updated Mar 2, 2026 11:19 AM IST
The senior management of Fino Payments Bank, whose MD & CEO Rishi Gupta was arrested on February 27 under provisions of the Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) Acts, has stressed that the bank remains operationally stable and the matter only related to GST evasion by certain programme managers of the bank.
The lender has nothing to do with the actions of the programme managers and that this issue is unlikely to have any impact on its plans to convert into a small finance bank, Ketan Merchant, chief financial officer, said in a conference call. Merchant has been appointed as the interim head by Fino Payments Bank to oversee day-to-day operations in the absence of Gupta.
The bank had informed late on Friday that Gupta was arrested under Section 132(1)(a) and 132(1)(i) of the CGST and SGST Act, 2017 on February 27 by the Directorate General of GST Intelligence in Hyderabad. In the backdrop of this development the stock declined 4% on the BSE on Monday morning at Rs 185 but made some recovery later.
“The bank and Mr Gupta in his official capacity has no role in the business operations of the programme managers in question. Fino Payments Bank remains compliant with all GST regulations and other applicable laws and regulatory requirements,” Merchant told investors.
The lender doesn’t directly or indirectly engage or promote any kind of betting activity through any forum or platform in any form, he said. He also stressed that the bank’s programme manager and merchant onboarding process was in line with regulatory requirements and due process had been followed.
Merchant also pointed that as a part of the onboarding check, one of the pre-conditions is that merchants referred by the programme managers need to have existing banking relations with other banks for facilitating UPI transactions. The bank doesn’t maintain any current account of programme managers or merchants, he clarified. “Bank doesn’t foresee any financial liability at this point in time on account of the matter in question. This is on account of the fact that there is no GST evasion by the bank. As we said earlier, the GST evasion is on the programme manager and there is no onus on the bank to monitor GST payments of the programme managers,” noted Merchant.
Nevertheless, the bank is maintaining enhanced monitoring and prudential buffers to ensure continuous stability. Customer balances as on February 27 were about Rs 2,250 crore and that remained intact, said Merchant. Officials clarified that a programme manager’s role was to identify merchants in the market and refer to the bank to onboard and provide end-to-end payment services for UPI transactions. Programme managers fundamentally have multiple relationships where they provide different services to the merchants, including debit and credit cards, UPI transactions, said officials adding that these typically deal with multiple banks, with Fino being one of the banks.
The Reserve Bank of India had granted in-principle approval for Fino Payments Bank to convert into a small finance bank in December 2025. The move would allow it to expand into lending and related products. The arrest of the MD and CEO could well throw a spanner in the works. A report on Monday stated that the RBI could put on hold the in-principle approval. However, top officials of the bank stressed that so far there had been no impact on their plans to convert to a small finance bank (SFB).
It is understood there have been meetings at various levels in the RBI and that the regulator is also likely to have sought details in relation to this arrest.
“As things stand there has been no impact whatsoever on our SFB plans. We continue to operate on our preparations on SFB plans, for which we have got regulatory timeline of 18 months, which came from December 5 onwards,” stated Merchant.
Officials stressed that bank officials couldn’t be held accountable for GST tax evasion of a programme manager. The lender also clarified that it had not issued any fake invoice and that all invoices issued were based on the services utilised by programme managers. The bank has also not evaded any GST due and is compliant with all the regulations relating to the payment of GST, it added.
The senior management of Fino Payments Bank, whose MD & CEO Rishi Gupta was arrested on February 27 under provisions of the Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) Acts, has stressed that the bank remains operationally stable and the matter only related to GST evasion by certain programme managers of the bank.
The lender has nothing to do with the actions of the programme managers and that this issue is unlikely to have any impact on its plans to convert into a small finance bank, Ketan Merchant, chief financial officer, said in a conference call. Merchant has been appointed as the interim head by Fino Payments Bank to oversee day-to-day operations in the absence of Gupta.
The bank had informed late on Friday that Gupta was arrested under Section 132(1)(a) and 132(1)(i) of the CGST and SGST Act, 2017 on February 27 by the Directorate General of GST Intelligence in Hyderabad. In the backdrop of this development the stock declined 4% on the BSE on Monday morning at Rs 185 but made some recovery later.
“The bank and Mr Gupta in his official capacity has no role in the business operations of the programme managers in question. Fino Payments Bank remains compliant with all GST regulations and other applicable laws and regulatory requirements,” Merchant told investors.
The lender doesn’t directly or indirectly engage or promote any kind of betting activity through any forum or platform in any form, he said. He also stressed that the bank’s programme manager and merchant onboarding process was in line with regulatory requirements and due process had been followed.
Merchant also pointed that as a part of the onboarding check, one of the pre-conditions is that merchants referred by the programme managers need to have existing banking relations with other banks for facilitating UPI transactions. The bank doesn’t maintain any current account of programme managers or merchants, he clarified. “Bank doesn’t foresee any financial liability at this point in time on account of the matter in question. This is on account of the fact that there is no GST evasion by the bank. As we said earlier, the GST evasion is on the programme manager and there is no onus on the bank to monitor GST payments of the programme managers,” noted Merchant.
Nevertheless, the bank is maintaining enhanced monitoring and prudential buffers to ensure continuous stability. Customer balances as on February 27 were about Rs 2,250 crore and that remained intact, said Merchant. Officials clarified that a programme manager’s role was to identify merchants in the market and refer to the bank to onboard and provide end-to-end payment services for UPI transactions. Programme managers fundamentally have multiple relationships where they provide different services to the merchants, including debit and credit cards, UPI transactions, said officials adding that these typically deal with multiple banks, with Fino being one of the banks.
The Reserve Bank of India had granted in-principle approval for Fino Payments Bank to convert into a small finance bank in December 2025. The move would allow it to expand into lending and related products. The arrest of the MD and CEO could well throw a spanner in the works. A report on Monday stated that the RBI could put on hold the in-principle approval. However, top officials of the bank stressed that so far there had been no impact on their plans to convert to a small finance bank (SFB).
It is understood there have been meetings at various levels in the RBI and that the regulator is also likely to have sought details in relation to this arrest.
“As things stand there has been no impact whatsoever on our SFB plans. We continue to operate on our preparations on SFB plans, for which we have got regulatory timeline of 18 months, which came from December 5 onwards,” stated Merchant.
Officials stressed that bank officials couldn’t be held accountable for GST tax evasion of a programme manager. The lender also clarified that it had not issued any fake invoice and that all invoices issued were based on the services utilised by programme managers. The bank has also not evaded any GST due and is compliant with all the regulations relating to the payment of GST, it added.