Fino Payments Bank CEO Arrest Sparks Industry Debate on Governance

Rishi Gupta, the MD and CEO of Fino Payments Bank, was arrested by the Directorate General of GST Intelligence for alleged violations of GST law related to program managers. The bank clarified its compliance, while industry bodies backed Gupta, urging a balanced enforcement approach from authorities.

Rishi Gupta, the Managing Director and CEO of Fino Payments Bank, was arrested by the Directorate General of GST Intelligence (DGGI) over alleged GST law violations concerning program managers working with multiple banks. Fino Payments Bank maintains that it has adhered to all regulations and that the investigation centers on external program managers, not the bank itself.

The banking sector was taken by surprise with Gupta's arrest, prompting the Payments Council of India (PCI) and the Startup Policy Forum (SPF) to rally behind him. The PCI highlighted the complex networks operated by financial institutions, stressing the need for proportional enforcement and emphasizing governance continuity in its communication with Finance Minister Nirmala Sitharaman.

The RBI has set a timeline of 18 months for Fino Payments Bank to convert into a Small Finance Bank, with management confident of completing the transition ahead of schedule. The recent developments have raised concerns about the impact of enforcing personal liability on senior management for third-party non-compliance, especially in the fintech industry.

(With inputs from agencies.)