Managing Director and CEO of Fino Payments Bank, Rishi Gupta, has been arrested by the Directorate General of GST Intelligence (DGGI), Hyderabad, in connection with an ongoing investigation involving one of the bank’s business partners under the Goods and Services Tax (GST) law.
The arrest was carried out under Sections 132(1)(a) and 132(1)(i) of the Central Goods and Services Tax (CGST) Act, 2017, and corresponding provisions of the State GST Act. These sections pertain to offences such as issuance of invoices without actual supply of goods or services and wrongful availment or utilisation of input tax credit.
Sources indicated that the case relates to alleged fake invoicing activities that reportedly resulted in GST revenue losses to the government. However, Fino Payments Bank clarified in a regulatory filing that the investigation pertains to certain business partner(s) and is not connected to the bank’s own GST compliance.
DGGI officials visited the bank’s head office on February 26 and questioned Gupta along with other senior management executives regarding transactions and dealings with the concerned partner entities, sources added.
In its communication to stock exchanges, the bank stated that it is extending full cooperation to the authorities and is providing all required information as part of the probe. Fino further asserted that none of its officials were involved in any wrongdoing. The bank also noted that the exact financial implications, if any, are still being assessed.
Following Gupta’s arrest, the board of directors convened a special meeting and appointed Chief Financial Officer Ketan Merchant as the interim head of the bank. Merchant will oversee daily operations and manage the institution’s affairs until the board resolves the leadership matter or Gupta resumes his duties, whichever occurs earlier.
The development weighed on investor sentiment, with shares of Fino Payments Bank declining 7.5 per cent to close at ₹192.45 on the BSE on Friday.
The incident comes at a crucial juncture for the bank. In December 2025, Fino Payments Bank had received in-principle approval from the Reserve Bank of India (RBI) to transition into a Small Finance Bank (SFB), becoming the first payments bank in the country to secure such approval. The ongoing investigation is likely to draw close regulatory scrutiny as the bank moves forward with its proposed transition.
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