Fino Bank CEO Rishi Gupta Arrested in GST Probe; Shares Fall 7.5%

Fino Payments Bank CEO Arrested Under GST Act

In a significant development, Rishi Gupta, the Managing Director and Chief Executive Officer of Fino Payments Bank, was arrested on Friday, February 27, 2026. The arrest was made by tax authorities in connection with alleged violations of the Goods and Services Tax (GST) law. The news triggered a sharp fall in the company's stock price and prompted an emergency board meeting to ensure leadership continuity.

Details of the Arrest

According to a regulatory filing by the bank, Gupta was taken into custody by the Directorate General of GST Intelligence (DGGI) in Hyderabad. The arrest was made under the provisions of sections 132(1)(a) and 132(1)(i) of the Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) Act, 2017. The official 'Ground of Arrest' was issued at 3:55 a.m. IST on the same day. The bank has emphasized that the investigation is not related to its own GST compliance but pertains to certain business partners.

Bank's Swift Response and Leadership Transition

Following the arrest, the Fino Payments Bank board convened a special meeting on the evening of February 27. To ensure the smooth functioning of daily operations, the board appointed Ketan Merchant, the current Chief Financial Officer (CFO), as the interim head of the organization. Merchant will oversee the bank's day-to-day activities until Gupta resumes office or the board makes a different resolution. The bank stated it is fully cooperating with the authorities and has informed the Reserve Bank of India (RBI) about the situation.

Investigation Focuses on Business Partners

Fino Payments Bank has clarified that the probe is linked to the activities of its business partners. Sources suggest the investigation connects to an ongoing inquiry into Wegofin Digital Solutions, a technology service provider. This firm is allegedly part of a larger network involved in illegal online gaming transactions estimated to be worth around Rs 5,000 crore. The bank has stated that none of its officials are directly involved and the matter concerns partners who use the bank's infrastructure for processing digital transactions.

Market Impact and Stock Performance

The market reacted negatively to the news. On Friday, shares of Fino Payments Bank plunged 7.50% to close at Rs 192.45 on the BSE. During the trading session, the stock fell as much as 12% to hit an intraday low of Rs 182.90. This decline is part of a broader negative trend for the stock, which has fallen over 32% in the last six months.

Disruption to Future Plans

The arrest comes at a critical time for Fino Payments Bank. In December 2025, the bank received an in-principle approval from the RBI to convert into a Small Finance Bank (SFB). Furthermore, the RBI had recently, on January 27, 2026, approved the re-appointment of Rishi Gupta as MD & CEO for another three-year term, which was set to begin on May 2, 2026. This development casts uncertainty over the bank's strategic leadership and transition plans.

Recent Regulatory Scrutiny

This is not the first instance of Fino Payments Bank facing regulatory challenges. In October 2025, the Securities and Exchange Board of India (SEBI) issued a show-cause notice to the company for alleged delays in disclosing material events related to fraudulent investment schemes run by some employees. Additionally, the RBI imposed a penalty of Rs 29.6 Lakh on the bank last year for non-compliance with certain directions related to the licensing of payments banks.

Financial Performance Overview

The bank's recent financial performance has also been under pressure. For the third quarter of FY26, Fino Payments Bank reported a 47% year-on-year decline in net profit, which stood at Rs 12.3 crore compared to Rs 23.1 crore in the same period last year. The total income for the quarter also decreased by 15% year-on-year to Rs 394.4 crore.

Conclusion

The arrest of CEO Rishi Gupta has placed Fino Payments Bank in a challenging position, impacting its stock performance and raising questions about its leadership stability during a crucial transition period. While the bank has assured stakeholders that its operations are unaffected and the investigation is focused on external partners, investors will be closely monitoring further developments. The interim leadership under CFO Ketan Merchant is tasked with navigating the bank through this period of uncertainty as the investigation proceeds.