Fino Payments expects to complete SFB conversion process 18 mos

Fino Payments expects to complete SFB conversion process 18 mos

Fino Payments Bank Aims to Complete SFB Conversion Within 18-Month Regulatory Timeline Amid Ongoing GST Probe

Fino Payments Bank (Fino PB) has reaffirmed its commitment to completing its transition to a small finance bank (SFB) within the 18-month regulatory timeline set by the Reserve Bank of India (RBI), despite the recent arrest of its MD and CEO, Rishi Gupta, by GST authorities. The bank received in-principle approval for the conversion in December 2025 and has stated that its plans remain unaffected by the ongoing investigation according to Fino PB.

The RBI granted Fino PB 18 months from December 2025 to finalize the SFB conversion, a process that would enable the bank to expand its services to include lending to individuals and businesses. Ketan Merchant, Fino PB's CFO, emphasized that the bank has maintained open communication with regulators and that no regulatory concerns have been raised regarding its SFB plans.

Fino PB reported that its operations continue uninterrupted, with deposits growing to ₹2,250 crore as of February 26—up from previous levels—and an average of 10,000 low-cost deposit accounts opened daily. The bank also clarified that it does not maintain current accounts for program managers or merchants and that funds from UPI transactions are settled into existing accounts with other banks.

The GST investigation, led by the Directorate General of GST Intelligence (DGGI), focuses on alleged tax evasion linked to program managers associated with multiple banks, including Fino PB. The bank has denied any involvement in the alleged irregularities, stating that its onboarding processes comply with regulatory requirements and that program managers are not directly supervised by its leadership.

While Fino PB insists it has no financial liability in the matter, some sources suggest the RBI may temporarily suspend its SFB conversion pending clarity on the bank's role in the alleged GST evasion. However, the bank has not indicated any such delay and remains confident in its ability to meet the regulatory deadline.

As the judicial process unfolds, Fino PB continues to emphasize its compliance with GST regulations and its adherence to due diligence in merchant onboarding. The outcome of the investigation could influence the broader regulatory scrutiny of payments banks' third-party partnerships in India's evolving financial landscape.

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