The Directorate General of GST Intelligence (DGGI) recently arrested the CEO of Fino Payments Bank, Rishi Gupta. The government agency is investigating GST evasion of Rs 3,000 crore by the bank, which is suspected of using shell companies and payment aggregators to funnel illicit funds generated from online money gaming. Now, Gupta’s arrest has sent ripples through the financial services ecosystem, with senior industry executives questioning the manner in which the action was carried out.In a letter to finance minister Nirmala Sitharaman, the Payments Council of India (PCI), which represents digital payments companies, has written to seek urgent intervention and call for greater proportionality in enforcement action.
Read the letter PCI sent to finance minister about Fino Payment Bank CEO’s arrest
In its letter to the finance minister, PCI stated that regulated financial institutions function through networks that include merchants, technology partners and business correspondents. It said that holding senior executives personally liable for issues related to alleged non-compliance by third parties could affect management continuity and governance processes.PCI Chairman Vishwas Patel wrote (as seen by the Economic Times): “We believe it is important for the industry to articulate concerns around proportionality and governance continuity when supervised institutions and their leadership are involved. We have placed these considerations before the Honourable Finance Minister in a spirit of constructive engagement. Details of the case remain unclear. Many fintech founders have raised concerns about the manner of the arrest, largely in their personal capacities,” said the founder of a fintech startup, requesting anonymity.”Other tech leaders who have talked about the arrest include former Infosys CFO TV Mohandas Pai. In a post shared on the microblogging site X, (formerly Twitter) he tagged Sitharaman and wrote, “Madame @nsitharaman please see this. How can a ceo of a regulated bank be arrested for an issue with a business partner? Is this not overreach. @FinMinIndia has given vast powers for GST. What is the safeguard for citizens against misuse?please intervene.”Replying to the post, Sitharaman said, “Thanks for sharing this. Will check.”The Mumbai-based payments bank informed stock exchanges about Gupta’s arrest and announced the appointment of chief financial officer Ketan Merchant as interim head. The probe is part of an ongoing investigation into alleged financial transactions linked to the bank’s payment processing operations.In a statement, Fino Payments Bank said the investigation was related to certain business partners and not to the bank or its MD & CEO. “The issue is with regard to a GST investigation pertaining to our business partner(s). The bank and its MD & CEO – Mr Rishi Gupta – have nothing to do with the actions of the business partner(s). We have faith in the country’s judiciary and will continue to extend cooperation and assistance to the authorities in the ongoing process,” the company said.
