710
12 days ago
After CEO Arrest, Fino Payments Bank Says SFB Transition On Track
Summary
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Stay ahead with the latest news, funding, startup financials, & governments policies on the hottest tech industries in the Indian startup ecosystem.
Get featured, partner or work with India's #1 startup media & intelligence platform and explore what else Inc42 has to offer.
D2CX by Inc42 is a 12-week hands-on program to help you level up your D2C game. Learn from India's top 1% D2C founders and experts through actionable insights, proven strategies and tactics on how to 10X your D2C brand.
ManagementX by Inc42 – India’s first Startup Management Program is a 6-month hands-on program that will take you on an intense journey that shatters the outdated “employee mindset” and equips you with the “leader mindset”.
D2CX Foundations by Inc42 is a 6 week hands-on program to help you launch your D2C brand successfully and profitably. Learn from India’s top 1% of D2C founders & experts through actionable insights, proven strategies and tactics on how to launch a successful D2C Brand in 6 weeks.
Fino Payments Bank said it remains focused on its transition into a small finance bank (SFB), even as it deals with the fallout of the arrest of its MD and CEO Rishi Gupta
This comes days after officials from the Directorate General of GST Intelligence named Gupta in an investigation related to alleged GST evasion
Notably, the DGGI has alleged that Gupta was one of the “masterminds” in an organised syndicate involved in routing funds linked to illegal online gaming platforms through shell entities
Fino Payments Bank said it remains focused on its transition into a small finance bank (SFB), even as it deals with the fallout of the arrest of its MD and CEO Rishi Gupta for alleged GST evasion.
During a call with investors, the management of Fino Payments Bank stressed that there is no impact on its transition to becoming a small finance bank and preparations continue as planned within the regulatory timeline granted by the RBI.
CFO Ketan Merchant, who has been appointed as the interim head following Gupta’s arrest, said the bank proactively engaged with regulators, including the RBI and the stock exchanges, and has not received any communication suggesting a disruption to its SFB transition.
The bank had received in-principle approval from the RBI in December 2025 to transition into a small finance bank and has an 18-month window to complete the process.
In an exchange filing today, the bank said, “The RBI had given us a timeline of 18 months to complete the conversion of the bank into a small finance bank. The bank expects to complete the process before the stipulated timeline with a differentiated business model and assurance first approach.”
This comes days after officials from the Directorate General of GST Intelligence named Gupta in an investigation related to alleged GST evasion. Fino Payments Bank has said that the case pertains to its programme managers and not the bank. It has maintained that it has discharged all its GST liabilities on revenues earned.
To ensure continuity, the board has constituted a committee of directors and senior executives to oversee operations, with Merchant supervising day-to-day operations in the absence of Gupta.
During the call, Merchant said that the bank’s liquidity remains stable. Customer balances stood at about ₹2,250 Cr as of February 26 and have since increased.
The bank continues to open around 10,000 CASA accounts daily, while average daily throughput remains in the range of ₹1,300 Cr, in line with recent trends.
Addressing concerns about exposure to online gaming merchants, the bank said real money gaming merchants were blocked in August 2025 after the activity was disallowed by the government.
The three programme managers under scrutiny accounted for about 8-10% of overall throughput during the year, and no real money gaming revenue was recorded in the third quarter.
The bank’s management said it does not directly or indirectly promote betting activity and merchant onboarding is carried out by relevant teams in line with regulatory norms. It added that merchants referred by programme managers are required to have existing banking relationships with other banks for UPI transactions.
Declining to comment on legal strategy as the matter is sub judice, the bank said it does not foresee any financial liability arising from the case at this stage.
According to government sources, the DGGI has alleged that Gupta was one of the “masterminds” in an organised syndicate involved in routing funds linked to illegal online gaming platforms through shell entities and programme managers associated with Fino Payments Bank.
The DGGI’s analysis of GSTR-1 filings of the bank showed that the taxable value of services provided to merchants onboarded through three non-operational programme managers between October 1, 2023 and September 30, 2025 was about ₹28 Cr.
Assuming a service fee of 0.75%, investigators have estimated that the total amount received by those entities would be around ₹3,000 Cr. Of this, the total money routed through merchants linked to online gaming resellers or programme managers associated with the bank is estimated at around ₹2,500 Cr.
The sources said the alleged GST implication is pegged at approximately ₹840 Cr, calculated at 28% of the estimated ₹3,000 Cr turnover.
The tax authorities have alleged that three programme managers – PS Rao Digital Solutions (OPC) Pvt Ltd, Billexpress Solutions Pvt Ltd and Powerfin Technology Pvt Ltd – were found to be non-functional or dummy entities during the course of the probe.
These entities allegedly onboarded around 36 shell merchant entities through the bank’s BAPA service and were involved in routing funds linked to online gaming without payment of appropriate GST.
Gupta’s arrest memo named two merchant entities, Oceanique Web Solutions Pvt Ltd and Webwin IT Hub Solutions Pvt Ltd, which were verified and found to be non-existent at their declared addresses.
A panchnama was reportedly drawn in this regard in early January 2026. These entities were allegedly operating online gaming platforms, including funinmatch360.com and RaceJeet, without issuing invoices and without declaring actual turnovers in GST returns.
Notably, the arrest of Gupta caused a furore, with finance minister Nirmala Sitharaman saying that the ministry will reevaluate the case.
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ManagementX by Inc42 – India’s first Startup Management Program is a 6-month hands-on program that will take you on an intense journey that shatters the outdated “employee mindset” and equips you with the “leader mindset”.
D2CX Foundations by Inc42 is a 6 week hands-on program to help you launch your D2C brand successfully and profitably. Learn from India’s top 1% of D2C founders & experts through actionable insights, proven strategies and tactics on how to launch a successful D2C Brand in 6 weeks.
Stay ahead with the latest news, funding, startup financials, & governments policies on the hottest tech industries in the Indian startup ecosystem.
Get featured, partner or work with India's #1 startup media & intelligence platform and explore what else Inc42 has to offer.
Stay ahead with the latest news, funding, startup financials, & governments policies on the hottest tech industries in the Indian startup ecosystem.
Get featured, partner or work with India's #1 startup media & intelligence platform and explore what else Inc42 has to offer.
D2CX by Inc42 is a 12-week hands-on program to help you level up your D2C game. Learn from India's top 1% D2C founders and experts through actionable insights, proven strategies and tactics on how to 10X your D2C brand.
ManagementX by Inc42 – India’s first Startup Management Program is a 6-month hands-on program that will take you on an intense journey that shatters the outdated “employee mindset” and equips you with the “leader mindset”.
D2CX Foundations by Inc42 is a 6 week hands-on program to help you launch your D2C brand successfully and profitably. Learn from India’s top 1% of D2C founders & experts through actionable insights, proven strategies and tactics on how to launch a successful D2C Brand in 6 weeks.
Fino Payments Bank said it remains focused on its transition into a small finance bank (SFB), even as it deals with the fallout of the arrest of its MD and CEO Rishi Gupta
This comes days after officials from the Directorate General of GST Intelligence named Gupta in an investigation related to alleged GST evasion
Notably, the DGGI has alleged that Gupta was one of the “masterminds” in an organised syndicate involved in routing funds linked to illegal online gaming platforms through shell entities
Fino Payments Bank said it remains focused on its transition into a small finance bank (SFB), even as it deals with the fallout of the arrest of its MD and CEO Rishi Gupta for alleged GST evasion.
During a call with investors, the management of Fino Payments Bank stressed that there is no impact on its transition to becoming a small finance bank and preparations continue as planned within the regulatory timeline granted by the RBI.
CFO Ketan Merchant, who has been appointed as the interim head following Gupta’s arrest, said the bank proactively engaged with regulators, including the RBI and the stock exchanges, and has not received any communication suggesting a disruption to its SFB transition.
The bank had received in-principle approval from the RBI in December 2025 to transition into a small finance bank and has an 18-month window to complete the process.
In an exchange filing today, the bank said, “The RBI had given us a timeline of 18 months to complete the conversion of the bank into a small finance bank. The bank expects to complete the process before the stipulated timeline with a differentiated business model and assurance first approach.”
This comes days after officials from the Directorate General of GST Intelligence named Gupta in an investigation related to alleged GST evasion. Fino Payments Bank has said that the case pertains to its programme managers and not the bank. It has maintained that it has discharged all its GST liabilities on revenues earned.
To ensure continuity, the board has constituted a committee of directors and senior executives to oversee operations, with Merchant supervising day-to-day operations in the absence of Gupta.
During the call, Merchant said that the bank’s liquidity remains stable. Customer balances stood at about ₹2,250 Cr as of February 26 and have since increased.
The bank continues to open around 10,000 CASA accounts daily, while average daily throughput remains in the range of ₹1,300 Cr, in line with recent trends.
Addressing concerns about exposure to online gaming merchants, the bank said real money gaming merchants were blocked in August 2025 after the activity was disallowed by the government.
The three programme managers under scrutiny accounted for about 8-10% of overall throughput during the year, and no real money gaming revenue was recorded in the third quarter.
The bank’s management said it does not directly or indirectly promote betting activity and merchant onboarding is carried out by relevant teams in line with regulatory norms. It added that merchants referred by programme managers are required to have existing banking relationships with other banks for UPI transactions.
Declining to comment on legal strategy as the matter is sub judice, the bank said it does not foresee any financial liability arising from the case at this stage.
According to government sources, the DGGI has alleged that Gupta was one of the “masterminds” in an organised syndicate involved in routing funds linked to illegal online gaming platforms through shell entities and programme managers associated with Fino Payments Bank.
The DGGI’s analysis of GSTR-1 filings of the bank showed that the taxable value of services provided to merchants onboarded through three non-operational programme managers between October 1, 2023 and September 30, 2025 was about ₹28 Cr.
Assuming a service fee of 0.75%, investigators have estimated that the total amount received by those entities would be around ₹3,000 Cr. Of this, the total money routed through merchants linked to online gaming resellers or programme managers associated with the bank is estimated at around ₹2,500 Cr.
The sources said the alleged GST implication is pegged at approximately ₹840 Cr, calculated at 28% of the estimated ₹3,000 Cr turnover.
The tax authorities have alleged that three programme managers – PS Rao Digital Solutions (OPC) Pvt Ltd, Billexpress Solutions Pvt Ltd and Powerfin Technology Pvt Ltd – were found to be non-functional or dummy entities during the course of the probe.
These entities allegedly onboarded around 36 shell merchant entities through the bank’s BAPA service and were involved in routing funds linked to online gaming without payment of appropriate GST.
Gupta’s arrest memo named two merchant entities, Oceanique Web Solutions Pvt Ltd and Webwin IT Hub Solutions Pvt Ltd, which were verified and found to be non-existent at their declared addresses.
A panchnama was reportedly drawn in this regard in early January 2026. These entities were allegedly operating online gaming platforms, including funinmatch360.com and RaceJeet, without issuing invoices and without declaring actual turnovers in GST returns.
Notably, the arrest of Gupta caused a furore, with finance minister Nirmala Sitharaman saying that the ministry will reevaluate the case.
Unlock special offers and join 10,000+ founders, investors & operators staying ahead in India’s startup economy.
Unleash your potential by exploring unlimited articles, trackers, and playbooks. Identify the
hottest startup deals, supercharge your innovation projects, and stay updated with expert
curation.
Empower yourself with comprehensive playbooks, expert analysis, and invaluable insights. Learn
to validate ideas, acquire customers, secure funding, and navigate the journey to startup
success.
Access 75+ in-depth reports on frontier industries. Gain exclusive market intelligence,
understand market landscapes, and decode emerging trends to make informed decisions.
Stay ahead with startup and funding trackers. Analyse investment strategies, profile successful
investors, and keep track of upcoming funds, accelerators, and more.
Join a community of 10,000+ leaders & operators – unlock unlimited access to Inc42 stories,
videos, deals, member-only perks, and more.
Unlock unlimited access to 500+ monthly new stories and Inc42’s complete archive of
40,000+ stories.
Unlock unlimited access to 500+ monthly new stories and Inc42’s complete archive of
40,000+ stories.
Over $250,000 worth deals on software & tools to help your business scale up.
Network with industry leaders & operators with exclusive invites to Inc42’s
member-only virtual events
Enjoy an ad-free and clutter-free
experience as a member, focus on
what really matters to you
Your contribution will go on to
support and empower our unbiased
& data-driven journalism
Join 1000's of entrepreneurs, business leaders & makers and stay ahead with our sharp,
incisive & data-driven analysis on India’s tech and startup economy!
Unlock personalised stories, ad-lite reading, and exclusive newsletters on Inc42.
Tired Of Playing Catchup On Indian Tech?
Stay Ahead. Every Morning at 8
Get The Week’s Most Consequential Developments.
Inc42 In-Depth is your daily 9 PM newsletter with sharp insights from India’s startup economy.
Inc42 Moneyball is your Thursday newsletter on India’s venture capital trends. 4 PM sharp.
Inc42 Markets is your weekly newsletter on tech IPOs & startup stocks. Every Sunday
get access to a list of 200+ family offices betting big on startups
Get access to a list of Alma Mater Of India's Unicorn & Soonicorn Founders
Explore 75,000+ startups, 3,500+ investors, 25,000+ funding rounds and more. Build shortlists and export them instantly.
Login or create a free account to continue reading in private mode.
AI Description
Fino Payments Bank is navigating challenges following the arrest of its CEO, Rishi Gupta, while maintaining its focus on transitioning into a small finance bank (SFB). The bank is committed to ensuring the transition remains on track despite the legal issues.