Fino Payments Bank CEO Rishi Gupta Arrested in GST Probe; CFO Takes Interim Charge

Fino Payments Bank CEO Rishi Gupta Arrested in GST Probe; CFO Takes Interim Charge | Quick Digest
Fino Payments Bank MD & CEO Rishi Gupta was arrested on February 27, 2026, under GST provisions in a probe linked to business partners, not the bank's compliance. Ketan Merchant, CFO, has been appointed interim head to ensure operational continuity. The bank is cooperating with authorities and asserts no other officials are involved.

Key Highlights

  • Fino Payments Bank MD & CEO Rishi Gupta arrested.
  • Arrest made under CGST and SGST Act provisions.
  • Investigation linked to bank's business partners, not its GST compliance.
  • CFO Ketan Merchant appointed interim head of operations.
  • Bank states no other officials are involved in the probe.
  • No immediate impact reported on the bank's operations.
Rishi Gupta, the Managing Director and Chief Executive Officer of Fino Payments Bank, was arrested on Friday, February 27, 2026, under specific provisions of the Central Goods and Services Tax (CGST) Act and State Goods and Services Tax (SGST) Act. The arrest was carried out by the Directorate General of GST Intelligence (DGGI), Hyderabad unit, early in the morning, around 3:55 a.m. IST. This development marks a significant event for the Indian financial sector, particularly for Fino Payments Bank, which recently received 'in-principle' approval from the Reserve Bank of India (RBI) to transition into a Small Finance Bank (SFB) in December 2025. Following Gupta's arrest, Fino Payments Bank's board swiftly convened a special meeting on the same day, concluding around 7:06 p.m. IST. During this meeting, Ketan Merchant, the Chief Financial Officer (CFO) of the bank, was appointed as the interim Head of the Organisation. Merchant's responsibility is to oversee and manage the bank's day-to-day operations in Gupta's absence, until a further resolution by the board or until Gupta resumes his office, whichever occurs earlier. The bank has made regulatory filings to the stock exchanges (BSE and NSE) under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, to disclose these events. In these filings, Fino Payments Bank explicitly clarified that the investigation leading to Rishi Gupta's arrest is related to certain business partner(s) of the bank and is not connected to the bank's own GST compliance. Furthermore, the bank emphasized that none of its other officials are involved in the matter under investigation and that it is fully cooperating with the authorities by providing all necessary information. While the exact details of the alleged GST evasion by the business partners are still under review, sources suggest the matter might be related to fake invoices that caused GST loss to the government. One report specifically linked the probe to an alleged online betting-linked GST evasion case, with an estimated amount involved that caused a significant loss. The arrest was made under Section 132(1)(a) and 132(1)(i) of the CGST and SGST Act, 2017. Section 132(1)(a) typically pertains to supplying goods or services without issuing an invoice with the intent to evade tax. Despite the high-profile arrest, Fino Payments Bank has assured stakeholders that there is currently no immediate operational or financial impact on the bank. It has also committed to disclosing any future material developments concerning the investigation to the stock exchanges. The news of Gupta's arrest had an immediate impact on the bank's share price, which fell by 7.5% on Friday to close at ₹192.45 on the BSE. The incident has sparked discussions among legal experts and financial professionals regarding the stringent nature of immediate arrests under GST laws. Rajesh Narain Gupta, founder and chairman of SNG & Partners, expressed shock, highlighting the contrast between the RBI's recent approval for Gupta's re-appointment (effective May 2, 2026, and cleared after a 'fit and proper' criterion assessment) and the GST department's actions. This suggests a potential need for re-examining certain provisions of the GST Act, especially concerning the grounds for immediate arrests. Rishi Gupta has been a foundational figure at Fino, having served as MD & CEO of Fino PayTech Limited (the holding company) before it became a payments bank. He is credited with leading Fino Payments Bank to become the first payments bank to list on stock exchanges and fostering a strong compliance culture within the institution. His re-appointment for a three-year term from May 2, 2026, was approved by the board in January 2026, subject to RBI and shareholder approvals, further underscoring the board's confidence in his leadership prior to this arrest. In essence, the situation involves a prominent banking CEO arrested in connection with a GST probe concerning business partners, prompting a temporary leadership change at Fino Payments Bank, while the bank maintains its own innocence and operational stability. The incident underscores ongoing regulatory scrutiny in the financial sector and questions surrounding GST enforcement practices.

Frequently Asked Questions

What led to the arrest of Rishi Gupta, MD & CEO of Fino Payments Bank?

Rishi Gupta was arrested by the Directorate General of GST Intelligence (DGGI), Hyderabad unit, under Sections 132(1)(a) and 132(1)(i) of the CGST and SGST Acts. The investigation is primarily linked to alleged GST evasion by certain business partners of Fino Payments Bank, possibly involving fake invoices and an online betting-linked GST fraud.

What is Fino Payments Bank's official stance on the investigation?

Fino Payments Bank has clarified in its regulatory filings that the investigation relates to its business partners and is not connected to the bank's own GST compliance. The bank also stated that none of its officials are involved in the matter, apart from Mr. Gupta's arrest, and that it is fully cooperating with the authorities.

Who is currently leading Fino Payments Bank after Rishi Gupta's arrest?

Following Rishi Gupta's arrest, the board of Fino Payments Bank appointed Ketan Merchant, the Chief Financial Officer (CFO), as the interim Head of the Organisation. He will oversee the day-to-day operations until the board resolves the leadership issue or Mr. Gupta resumes office.

What is the potential impact of this arrest on Fino Payments Bank?

Fino Payments Bank has stated that there is currently no immediate operational or financial impact on the bank. However, the news did lead to a drop in the bank's share price. The bank has committed to making further disclosures if any material impact arises in the future.

Was Rishi Gupta recently re-appointed or approved for re-appointment?

Yes, Fino Payments Bank's board had approved Rishi Gupta's re-appointment as MD & CEO for a three-year term starting May 2, 2026. This re-appointment was subject to approvals from the RBI and shareholders, and the RBI had already granted its 'fit and proper' approval for his re-appointment in January 2026.

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