Fino Payments Bank managing director and chief executive officer Rishi Gupta has stepped down after seeking voluntary early retirement, marking a leadership transition at a critical stage in the lender’s planned conversion into a small finance bank.
The resignation was announced on Thursday, with the bank’s board simultaneously stating that it had found no prima facie case against Gupta in connection with an investigation conducted by the Directorate General of GST Intelligence (DGGI), Hyderabad.
Gupta’s exit comes months after his arrest in a probe linked to alleged goods and services tax evasion associated with the real money gaming sector.
In a statement cited by Business Standard, the bank said its board had reviewed documents, legal opinions and related reports before concluding that no prima facie case could be established against Gupta.
“Based on the consideration of the documents available with the Bank as on date, including the legal opinions and reports received and the facts emanated therefrom, the Board is of the view that no prima facie case could be made out against Mr Rishi Gupta,” the company said.
Leadership change comes during key transition
The leadership move comes at an important moment for Fino Payments Bank, which recently secured in-principle approval from the Reserve Bank of India (RBI) to transition into a small finance bank.
The conversion is expected to significantly expand the bank’s operational scope beyond payments banking services.
As part of the transition arrangement, the board approved the extension of Ketan Merchant’s tenure as interim chief executive officer for up to three months from May 27, subject to RBI approval.
The bank also extended the tenure of Anup Agarwal as interim chief financial officer for up to three months from July 6.
Key developments announced by the bank include:
• Rishi Gupta stepping down after seeking early retirement
• RBI granting in-principle approval for small finance bank conversion
• Extension of Ketan Merchant’s interim CEO tenure
• Extension of Anup Agarwal’s interim CFO tenure
• Board stating no prima facie case was found against Gupta
In a letter addressed to the board, Gupta said he planned to pursue opportunities outside the bank after spending nearly two decades with the organisation.
“It gives me immense pride that Fino is the only Payments Bank to receive the in-principle approval of RBI for conversion to Small Finance Bank,” Gupta said in the letter cited by Business Standard.
“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 added.
Probe linked to gaming sector scrutiny
Gupta was arrested earlier in connection with an alleged GST evasion case linked to the real money gaming sector.
The matter emerged during heightened regulatory and tax scrutiny of online gaming businesses in India. All forms of real money gaming have been banned in the country since August last year.
According to the report, Gupta secured bail in March from the Special Judge for Trial of Economic Offences Cases in Hyderabad, nearly a month after his arrest.
Despite the investigation, Fino Payments Bank maintained that Gupta continued to meet the standards required to hold the position of managing director and chief executive.
The bank described him as “fit and proper” to continue in the role.
Focus shifts to small finance bank ambitions
The leadership transition comes as Fino Payments Bank attempts to position itself for its next phase of growth through conversion into a small finance bank.
Payments banks in India operate under restrictions that limit lending activities. Transitioning into an SFB structure would allow the company to expand into broader banking services, including lending operations.
Industry analysts say the conversion could provide Fino with opportunities to diversify revenue streams and compete more aggressively in India’s financial services market.
However, the shift also comes during a challenging period for the broader small finance banking sector.
According to earlier sector data referenced by Business Standard, listed small finance banks reported a 0.6% year-on-year decline in net profit during the first quarter of FY25, while provisions and contingencies more than doubled.
Fino Payments Bank itself recently reported a sharp decline in quarterly profitability. The bank’s fourth-quarter profit fell 70% to Rs 7.1 crore, according to earlier company disclosures.
The appointment of a permanent leadership team is likely to remain a key priority as the lender advances its transition plans and seeks regulatory approvals for the next stage of its banking expansion.