Fino Payments Bank CEO Rishi Gupta arrested for GST Act violation

The Hyderabad unit of the Directorate General of GST Intelligence has arrested Rishi Gupta, managing director and CEO of Fino Payments Bank, over an alleged GST evasion linked to online betting.

In a filing with the stock exchanges, the company said that Gupta was arrested under section 132(1)(a) of the Central GST (CGST) Act and section 132(1)(i) of the state GST Act.

Officials cited in reports said investigators suspect that nearly ₹3,000 crore from betting app transactions was routed through banking channels. The larger betting network under investigation may involve around ₹13,000 crore in transactions.

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This comes at an important time for the Mumbai-based payments bank, which received in-principle approval from the Reserve Bank of India in December to become a small finance bank. The change would let Fino accept term deposits without the ₹2 lakh limit on savings accounts and expand into full lending, including MSME and home loans.

A December analyst report had said that converting to a small finance bank (SFB) could significantly boost Fino’s margins and returns over the medium term, with lending expected to make up 20–25% of revenue within three years.

Investors are closely watching regulatory developments, especially regarding governance and final approval of the SFB licence. The bank with a current market cap of Rs 1600 crore, has seen its stock drop 25% year to date and could face further pressure when markets open on monday.

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The GST investigation focuses on allegations that funds from betting apps were routed through a network of entities including some digital solution firms and that dummy merchants were used to provide gaming services without invoices, allegedly causing GST evasion of over Rs 30 crore.

The bank clarified in its filing that the probe involves certain business partners and does not concern the bank’s own GST compliance. It also stated that no other bank officials are involved.

“The bank is co-operating with the authorities to provide all the necessary information. Presently there is no impact on the Bank,” the statement said, adding that appropriate disclosures would be made if any future impact arises.

After the arrest, the bank held a special board meeting on Friday evening from 6:45 p.m. to 7:06 p.m. The board appointed chief financial officer Ketan Merchant to lead the bank and manage daily operations in Gupta’s absence until further notice.

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