In a development that has sent shockwaves through India’s fintech and banking sectors, Rishi Gupta, the Managing Director and CEO of Fino Payments Bank, was arrested in the early hours of February 27, 2026. The arrest, executed by the Directorate General of GST Intelligence (DGGI) at approximately 3:55 AM, pertains to alleged violations of the Goods and Services Tax (GST) Act.
The news triggered an immediate sell-off in the bank’s stock, which plunged 7.50% to close at Rs 192.45 on the Bombay Stock Exchange (BSE). Following the arrest, the bank’s board convened an emergency meeting to stabilize the institution’s leadership.
Allegations of Online Betting and Fake Invoices
The investigation, led by the DGGI’s Hyderabad unit, centers on a massive financial web allegedly involving online betting and the use of fraudulent invoices to evade taxes. According to sources close to the probe, investigators are scrutinizing transactions worth nearly Rs 13,000 crore linked to a broader online betting network.
Specifically, it is alleged that approximately Rs 3,000 crore in funds generated through betting applications were routed through various banking channels and entities. The arrest of Rishi Gupta follows the detention of several other individuals associated with business partners of the bank, including directors of digital solution firms that allegedly facilitated these transactions.
Fino Payments Bank Response and Leadership Shift
In a regulatory filing with the National Stock Exchange (NSE) and BSE, Fino Payments Bank clarified that the investigation is directed toward the actions of its business partners and not the bank’s own internal GST compliance. The bank emphasized that no other officials within the organization are currently under investigation.
To ensure business continuity, the board has appointed Ketan Merchant, the current Chief Financial Officer (CFO), as the “Head of the Organisation.” Merchant will oversee day-to-day operations until Gupta is able to resume his duties or a permanent leadership solution is reached.
“The Bank maintains strong corporate governance standards and a robust compliance framework. We are cooperating fully with the authorities to provide all necessary information,” stated Ketan Merchant in an official release.
Legal Provisions and Ground of Arrest
Gupta has been booked under the following sections of the Central Goods and Services Tax (CGST) and State Goods and Services Tax (SGST) Act, 2017:
- Section 132(1)(a): Pertains to the supply of goods or services without an invoice with the intent to evade tax.
- Section 132(1)(i): Involves cases where the amount of tax evaded or input tax credit wrongly availed exceeds a specified threshold, making it a cognizable and non-bailable offense.
The timing of the arrest has drawn criticism from some legal circles. Rajesh Narain Gupta, Chairman of law firm SNG and Partners, questioned the necessity of immediate arrests under GST laws, suggesting that such “draconian” provisions could create unnecessary panic within the professional banking community.
Impact on Small Finance Bank Transition
The legal turmoil comes at a delicate juncture for the Navi Mumbai-based lender. In late 2025, Fino Payments Bank received in-principle approval from the Reserve Bank of India (RBI) to transition into a Small Finance Bank (SFB). This conversion is critical for the bank as it would allow the entity to transition from a pure payments model to a full-fledged lending institution.
Industry analysts are now closely watching whether this leadership crisis will affect the final regulatory clearances required for the SFB transition. While the bank reports “no immediate impact” on operations, the halving of net profits in the previous quarter (Q3 FY26) to Rs 12.3 crore has already put the stock under pressure.
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Current Status of Rishi Gupta
Following his arrest, reports surfaced that Rishi Gupta was shifted to a local hospital after complaining of chest pain. DGGI officials are currently awaiting medical clearance before producing him before a jurisdictional court for further proceedings.
As the investigation into the Rs 13,000 crore betting network expands, the financial sector awaits further disclosures regarding the extent of the “business partner” involvement and whether any recovery of the evaded tax amounts is imminent.
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