Following Gupta's arrest, the Fino board held a special meeting on Saturday evening, which commenced at 06:45 p.m. and concluded at 07:06 p.m. During this meeting, Chief Financial Officer Ketan Merchant was appointed as Head of the Organisation to carry on and oversee day-to-day operations in Gupta's absence. Merchant will act as the interim head till the leadership issue is resolved by the board or Gupta resumes office, whichever is earlier. Gupta is a founding member of Fino Payments Bank and earlier worked with Financial Information Network and Operations, the erstwhile name of the bank's promoter, Fino PayTech. PCI highlighted that Gupta had recently received regulatory approval for his reappointment as MD and CEO, noting that Fino Payments Bank had been granted in-principle approval by the Reserve Bank of India to transition into a Small Finance Bank - a development described as reflective of substantive supervisory engagement. Merchant said that despite the recent adverse developments, deposits at the bank have remained intact or have rather grown from ₹2,250 crore as on February 26, when Gupta was arrested. The bank continues to open 10,000 low-cost deposit accounts on average each day, and its throughput continues to be around ₹1,300 crore per day. Ketan Merchant assured that since the arrest, there has been no impact on the bank's deposit base, with customer balances from February 26 to 2026 standing at approximately ₹2,250 crores and remaining intact.
Ketan Merchant, CFO of Fino Payments Bank, has issued a comprehensive statement reiterating the bank's strong corporate governance standards and robust compliance framework. According to The Hindu BusinessLine, Merchant stated that following the bank's stock exchange disclosure dated February 27, 2026, the bank wants to reaffirm its commitment to strong corporate governance standards, a robust compliance framework and well-established processes in place. As a regulated entity, the bank complies with all applicable laws, including GST regulations. Merchant clarified that "the issue is with regard to a GST investigation pertaining to programme managers who have relationships with other banks including Fino Payments Bank Limited. The bank and its MD & CEO - Mr Rishi Gupta have nothing to do with the actions of the programme managers." The bank assured that operations remain normal and uninterrupted, with no impact on services, with Merchant emphasizing that the bank has full faith in the country's judiciary and will continue to extend full cooperation and assistance to the authorities in the ongoing process. Fino's legal advisors have expressed positive view regarding legal tenability of Gupta's arrest matter will now proceed as per Judicial process in Hyderabad.
Fino Payments Bank managing director Rishi Gupta was arrested on Friday by Directorate General of GST Intelligence (DGGI), Hyderabad unit, in connection with an alleged ₹3,000 crore GST evasion case involving online betting apps. According to The Hindu BusinessLine, the investigation is investigating a case of online money gaming, which is banned in India. Initial investigation indicated that GST evasion of several crores involving many shell and non-existent entities, payment aggregators etc. which have been used to funnel the illicit funds being generated by online money gaming. As reported in the bank's regulatory filing to BSE and NSE, the arrest was made under Section 132(1)(a) and 132(1)(i) of the CGST and SGST Act, 2017 respectively, with the ground of arrest issued at 03:55 a.m. (IST). The investigation relates to certain business partner(s) and not relating to the GST compliance of the bank itself. Section 132(1)(a) of the CGST Act 2017 pertains to cases where a person supplies any goods or services without issuing an invoice in violation of the provisions of the Act or the rules framed under it, with the intent to evade tax.
As reported by CNBC TV18, the bank's share price closed at ₹192.45 on the Bombay Stock Exchange, down by ₹15.60 or 7.50% for the day. According to The Times of India, the development comes weeks after Fino Payments Bank received in-principle approval to convert into a small finance bank. PCI noted that such developments may affect governance continuity, depositor and investor confidence, and ongoing regulatory engagements, particularly when institutions are under active supervisory oversight. The council emphasized that regulated financial institutions operate across complex networks comprising merchants, technology partners, and business correspondents, where questions surrounding personal attribution to senior leadership in matters linked to alleged third-party non-compliance can have far-reaching implications. PCI expressed full confidence in India's legal and regulatory framework while requesting the Finance Minister's consideration of broader institutional dimensions, maintaining that the bank maintains full faith in the country's judicial system and will continue to cooperate fully with the authorities in the ongoing proceedings. Despite the arrest, Fino does not see any financial liability at this point on account of this development and says that the alleged GST evasion was done by program managers and there is no onus on the bank to monitor the GST payment of program managers.
Ketan Merchant, interim head and CFO, has confirmed that the CEO's arrest will not impact Fino's transition to a Small Finance Bank (SFB). According to The Economic Times, "As things stand now, there is no impact whatsoever on our SFB plans," Merchant said on an analyst call. "We continue to operate on our preparations on SFB plans for which we have got a regulatory timeline of 18 months which came on 5th December onwards... Reserve Bank of India (RBI) has been monitoring, and they are also cognisant that this was something pertaining to a particular programme manager...we continue to proactively engage with the RBI." Shailesh Pandey, chief business officer at Fino, said the probe mainly revolves around three service providers who do business of about 8% to 10% of the overall annual throughput for Fino. The impact of these service providers on the bank's UPI throughput will be lower at 3% to 8%, as reported by The Economic Times. Established in 2017, the bank focuses on digital payments, savings accounts and agent services, with Merchant noting that "Our business volumes over the last three days have been maintained without any impact, which itself is a testimony of the faith of our customers, business partners, associates, business correspondents and merchants." Fino's daily average CASA opening numbers were maintained at around 10,000 and throughput at about ₹1,300 crores per day. Shares of Fino recovered partially to close almost flat at ₹192.15 apiece on the BSE.