Fino Payments Bank Denies GST Evasion After CEO Arrest

New Delhi: Fino Payments Bank has denied evading Goods and Services Tax (GST) or promoting betting activities after its Managing Director and Chief Executive Officer, Rishi Gupta, was arrested by the Directorate General of GST Intelligence (DGGI).

Gupta was arrested under Sections 132(1)(a) and 132(1)(i) of the CGST and SGST Act, 2017, in connection with a probe into alleged illicit fund flows involving shell companies and payment aggregators linked to online money gaming.

In a regulatory filing, the bank said the investigation relates to certain third-party programme managers working with multiple banks, not to its own GST compliance.

“The investigation by the DGGI was in relation to the program manager(s) associated with multiple banks and not on the GST compliance of the bank itself,” the bank said, adding that neither it nor its officials were involved in the activities of the programme managers under scrutiny.

The lender also clarified that it does not directly or indirectly promote betting through any platform.

Fino Payments Bank said its merchant onboarding and invoicing processes comply with regulatory norms. Onboarding is handled by business teams, not the MD & CEO, it said. Merchants referred by programme managers are required to have an existing banking relationship with another bank to facilitate TIPI transactions.

The bank denied issuing fake invoices, stating that all invoices are based on services availed by programme managers or merchants. It also highlighted its risk management framework for monitoring merchant transactions involving Virtual Payments Addresses (VPAs).

The arrest has surprised industry participants, particularly as the Reserve Bank of India has given the bank 18 months to complete its transition into a Small Finance Bank. The management has said it expects to complete the conversion within the stipulated timeline.

Industry bodies have expressed concern. The Payments Council of India (PCI) wrote to Finance Minister Nirmala Sitharaman seeking urgent intervention and calling for proportionality in enforcement action.

PCI Chairman Vishwas Patel said holding senior leadership personally liable for alleged third-party non-compliance could disrupt governance continuity at regulated institutions.

The Startup Policy Forum (SPF), while noting that Fino Payments Bank is not its member, said some fintech founders fear that coercive action linked to business partners’ alleged violations could set a troubling precedent for the sector.

Sitharaman, responding to social media posts, said the ministry would look into the matter.