Fino Bank Gets RBI Nod for Interim CEO Amid Leadership Uncertainty

Introduction

Fino Payments Bank is navigating a period of significant leadership uncertainty. The Reserve Bank of India (RBI) has approved the appointment of Chief Financial Officer (CFO) Ketan Merchant as the interim Chief Executive Officer (CEO). This development follows the recent arrest of the bank's Managing Director and CEO, Rishi Gupta, and occurs while a critical postal ballot on his re-appointment and remuneration is already underway, placing the bank's governance and future leadership under intense scrutiny.

RBI Approves Interim Leadership

In an exchange filing, Fino Payments Bank confirmed that the RBI, through a letter dated March 6, 2026, approved Ketan Merchant's appointment as Interim CEO. The appointment is effective from February 27, 2026, for a period of three months or until Rishi Gupta resumes office, whichever is earlier. Gupta's potential return is conditional upon a reassessment of his 'fit and proper' status by the bank's Nomination and Remuneration Committee (NRC) and its Board, followed by a final decision from the central bank. To ensure operational continuity, Anup Aggarwal, the bank's head of finance and investor relations, will serve as the interim CFO during this period.

The Context: Arrest of MD & CEO Rishi Gupta

The appointment of an interim leader was necessitated by the unexpected arrest of MD & CEO Rishi Gupta. While the specific details of the case remain under investigation, the bank has moved to reassure its stakeholders. Fino Payments Bank has stated that it maintains a strong corporate governance framework and is compliant with all laws. The bank also clarified that no other officials from the company are involved in the probe and that the event has had no material impact on its day-to-day business operations, which are proceeding as usual.

A Cloud Over Leadership Continuity

The timing of this leadership crisis is particularly notable. Just a month before his arrest, on January 27, 2026, the RBI had approved Rishi Gupta's re-appointment as MD & CEO for another three-year term, set to begin on May 2, 2026. This prior approval highlighted the regulator's confidence in his leadership at the time, making the subsequent events a sharp and unexpected turn that has created significant uncertainty around the bank's long-term leadership stability.

Crucial Shareholder Vote Underway

Compounding the situation is an ongoing postal ballot where shareholders are voting on two key resolutions concerning Rishi Gupta. The remote e-voting process, which commenced on February 28, 2026, is scheduled to conclude on March 29, 2026. The first resolution seeks approval for Gupta's remuneration for the financial year 2024-25. The second, and now more critical, resolution is to formally approve his re-appointment for the three-year term that the RBI had previously greenlit. The outcome of this vote, expected by March 31, 2026, will be a crucial indicator of shareholder sentiment.

Details of the Proposed Remuneration

The first resolution in the postal ballot details the proposed compensation for Rishi Gupta for FY 2024-25, which totals ₹5.70 crore. The package is structured with a significant performance-linked component, a structure that had already received RBI approval prior to the current crisis.

Gupta's Track Record and Bank's Performance

Under Rishi Gupta's stewardship, Fino Payments Bank has achieved several key milestones. As a founding member, he guided the bank to become the first payments bank to be listed on stock exchanges in November 2021. The bank's financial performance in FY 2024-25 demonstrated strong growth, which likely contributed to the board's decision to recommend his re-appointment.

The Path to a Small Finance Bank

A significant strategic achievement under Gupta's leadership was securing an 'in-principle' approval from the RBI for the bank's conversion into a Small Finance Bank (SFB). This transition is a pivotal moment for Fino, promising a wider range of services and growth opportunities. The current leadership vacuum introduces a potential complication to this crucial strategic shift, making stable governance more important than ever.

Market Reaction and Investor Concerns

The bank's stock performance has been under pressure, with significant negative returns over the past year. The recent events have done little to ease investor concerns. The leadership uncertainty, coupled with the ongoing regulatory scrutiny, adds a layer of risk for investors. The bank's management has constituted a committee of directors and senior executives to oversee operations and maintain stability during this transition.

What Lies Ahead

The immediate future of Fino Payments Bank's leadership hinges on two key events. The first is the outcome of the shareholder postal ballot, with results expected around March 31, 2026. The second is the conclusion of the investigation involving Rishi Gupta and the subsequent 'fit and proper' assessment by the bank's board and the RBI. For now, the bank operates under the interim leadership of Ketan Merchant, with all eyes on the decisions that will shape its governance structure in the coming weeks.