Rishi Gupta Resigns Fino MD & CEO Amid GST Probe

Rishi Gupta’s departure from Fino Payments Bank as its managing director (MD) and chief executive officer (CEO), effective May 21, marks a significant leadership transition for the financial institution. This decision comes amidst an ongoing investigation by the Directorate General GST Intelligence (DGGI), which had previously led to Gupta’s arrest. Despite the bank’s board affirming his suitability to continue in the role, Gupta chose to pursue voluntary early retirement, ushering in a period of interim leadership for the payments bank as it navigates regulatory scrutiny and focuses on its strategic objectives, including the pursuit of a small finance bank license.

Rishi Gupta’s Voluntary Exit and Board’s Endorsement

Fino Payments Bank officially announced that its board accepted Rishi Gupta’s request for voluntary early retirement, with his departure effective May 21. This decision means Gupta will cease to be a key managerial personnel (KMP) and senior managerial personnel (SMP) of the company. In parallel, the board approved the extension of Ketan Merchant’s tenure as interim CEO of the payments bank for a period of three months, pending Reserve Bank of India (RBI) approval. Additionally, Anup Agarwal’s tenure as interim CFO of the company has been extended until July 2026, ensuring continuity in critical leadership roles during this transitional phase.

Intriguingly, the board’s acceptance of Gupta’s resignation followed a thorough review of legal opinions and a report connected to the DGGI probe. Based on the documents and facts available to the bank as of the meeting date, the board concluded that “no prima facie case could be made out against Mr. Rishi Gupta.” Consequently, the board of the bank was of the view that Mr. Rishi Gupta was “fit and proper to continue as MD & CEO of the Bank.” This finding underscores a complex situation where external regulatory scrutiny prompted an executive’s departure despite an internal endorsement of his fitness to continue.

In his resignation letter, Gupta articulated his rationale for stepping down, stating, “At this stage after investing two decades in Fino, I feel it is an appropriate time to rediscover my purpose outside the Bank and explore new avenues that excite and challenge me in newer ways.” He further expressed his wishes for the bank’s continued success in the years ahead and offered his availability to ensure a seamless transition, indicating a planned and amicable separation from the institution he helped build over two decades.

The Directorate General GST Intelligence Probe

The backdrop to Gupta’s resignation is a high-profile investigation initiated by the Directorate General GST Intelligence (DGGI). This probe gained national attention approximately three months prior, in February, when the Hyderabad unit of the DGGI arrested Gupta. The investigation centers on alleged online betting-linked tax evasion, with claims of over ₹840 Cr being channeled through a syndicate involving shell entities and program managers, highlighting significant regulatory concerns within the financial sector.

The DGGI has posited that Gupta was part of a broader syndicate allegedly involved in funneling funds from illegal online gaming platforms. However, Fino Payments Bank has consistently maintained that the investigation primarily pertains to program managers associated with various banks and does not directly relate to Fino Payments Bank’s own GST compliance. Following his arrest, a special judge for trial of economic offences cases in Hyderabad granted bail to Gupta in March, after the Telangana High Court (HC) had dismissed his initial writ petition seeking bail, adding another layer of legal complexity to the situation.

Fino Payments Bank’s Operational Stability and Strategic Outlook

Amidst the leadership transition and ongoing regulatory scrutiny, Fino Payments Bank has moved to reassure stakeholders about its operational integrity and strategic direction. The bank explicitly stated that its operations remain stable and that there will be no adverse impact on its services. This assurance aims to maintain customer and investor confidence during a period of significant change at the top executive level, emphasizing the resilience of its core business functions.

Furthermore, Fino Payments Bank reiterated its commitment to the operationalization of the small finance bank (SFB) license within the stipulated timelines. This strategic objective remains a key focus for the institution, signaling its intent to continue its growth trajectory and expand its financial services offerings, irrespective of the recent executive changes and ongoing external investigations. The pursuit of an SFB license represents a critical step in the bank’s long-term strategic vision.

Market Performance and Investor Sentiment

The regulatory clampdown and the uncertainty surrounding the leadership have visibly impacted Fino Payments Bank’s market performance. The company’s shares have experienced a notable downward trajectory, declining by nearly 43% over the past three months. On a year-to-date (YTD) basis, the shares have seen an even steeper fall, down more than 53%, reflecting significant investor apprehension regarding the implications of the GST probe and the leadership transition.

As of the close of the trading session prior to the announcement, shares of Fino Payments Bank were trading at ₹120.95 on the BSE, marking a 0.41% decline. The market’s reaction underscores the sensitivity of financial institutions to regulatory investigations and leadership changes, particularly when they involve allegations of financial impropriety, even if an internal review finds no prima facie case against the executive in question.