Fino Payments Bank CEO Arrested

The investigation, led by the Hyderabad unit of the Directorate General of GST Intelligence (DGGI), centers on allegations of illicit fund flows from banned online money and betting games. Authorities are scrutinizing transactions worth over ₹13,000 crore connected to this online gaming syndicate. The core of the probe involves the alleged funneling of approximately ₹3,000 crore through a network of shell companies and non-KYC compliant bank accounts. The DGGI claims that Fino Bank's program managers and partners, such as PSRao Digital Solutions and Wegofin Digital Solutions, were non-functional, dummy entities used for routing these funds. CEO Rishi Gupta was arrested under Sections 132(1)(a) and 132(1)(i) of the CGST and SGST Acts, which pertain to supplying services without an invoice to evade tax where the amount exceeds ₹5 crore. These are non-bailable offenses that can carry a prison sentence of up to five years and a fine. Fino Payments Bank has consistently denied direct involvement, stating the investigation pertains to its business partners and not the bank's own GST compliance. The bank asserts that its merchant onboarding processes follow all regulatory requirements and that it has not issued any fake invoices. In the wake of the arrest, the bank's board appointed Chief Financial Officer Ketan Merchant as interim head to manage daily operations. The move has drawn concern from industry bodies like the Payments Council of India (PCI), which has written to the Finance Minister urging "greater proportionality in enforcement action." This incident occurs just a month after the Reserve Bank of India (RBI) approved Gupta's reappointment as MD and CEO. It also follows the RBI's in-principle approval in December for Fino's conversion into a Small Finance Bank (SFB), a transition that experts believe may not be impacted unless direct governance lapses at the bank emerge.