Fino Payments Bank MD&CEO Rishi Gupta’s Arrest in GST Case Sparks Scrutiny; FM Says ‘Will Check’ after Public Outcry

Moneylife Digital Team 28 February 2026

Economy & Nation

In a major development that sent ripples through the banking sector, Fino Payments Bank Ltd's managing director and chief executive officer (MD&CEO) Rishi Gupta, has been arrested under provisions of the goods and service tax (GST) law. While the board appointed Ketan Merchant, its chief financial officer (CFO), as its chief, Fino Payments Bank clarified that the GST investigation relates to programme managers who have a relationship with other banks and it has nothing to do with Mr Gupta. The arrest of the MD&CEO of a regulated payments bank under GST provisions has prompted debate in financial and legal circles. Following public outcry over the arrest, Union finance minister Nirmala Sitharaman stated she will 'check' the matter.

Following the arrest, a special board meeting was convened on Friday evening. Fino Payments Bank board appointed chief financial officer (CFO) Ketan Merchant as head of the organisation to carry on and oversee the day-to-day operations of the Bank in Mr Gupta’s absence. The arrangement will remain in force until otherwise resolved by the board or until Mr Gupta resumes office.

In a separate statement, Mr Merchant says, “The issue is with regard to a GST investigation pertaining to our business partner(s). The Bank and its MD&CEO, Rishi Gupta, have nothing to do with the actions of the business partner(s).”

He says the Bank has strong corporate governance, a compliance framework and robust processes in place and is compliant with all applicable laws, including GST.

Mr Merchant added that the Bank has full faith in the judiciary and will continue to extend complete cooperation and assistance to the authorities. He also sought to reassure customers and investors that business operations will continue uninterrupted and that there will be no impact on services.

The development had sent a 'shock wave' among bankers and professionals, with many questioning the immediate use of arrest powers under GST laws and suggesting that the government re-examine the stringent provisions.

The matter also drew attention on social media. Mohandas Pai, former CFO and board member at Infosys publicly raised concerns and tagged the FM, questioning how the MD&CEO of a regulated bank could be arrested over an issue involving a business partner and whether adequate safeguards exist against misuse of wide GST powers.

Responding to the message, Ms Sitharaman says she would look into the issue.

Thanks for sharing this. Will check. https://t.co/G9YN14EUKn
— Nirmala Sitharaman (@nsitharaman) February 28, 2026

While the Bank has maintained that the investigation does not relate to its GST filings and that there is currently no operational impact, the arrest has inevitably placed its governance architecture under scrutiny as well.

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