Fino Payments Bank Ltd. Payments Bank, whose MD & CEO Rishi Gupta was arrested last week by the Directorate General of GST Intelligence (DGGI), on Monday said it continues to see steady business growth. The bank further said it has cleared all GST payments and complies with all regulations.
“The bank remains operationally stable and financially sound,” Chief Financial Officer Ketan Merchant said during an analyst call, adding that the bank’s priority was to ensure uninterrupted services to its customers.
He reiterated that the bank and its officials have nothing to do with the business or actions of the programme managers under investigation and that the bank has not issued any alleged fake invoices.
Rationale behind Gupta’s arrest
On the rationale behind Gupta’s arrest, the management said the matter is sub judice and declined to comment further. “Our legal advisers and consultants have expressed a positive view regarding the legal tenability of the action taken and the matter will now proceed through a judicial process in Hyderabad,” the CFO said.
The bank also clarified that it does not maintain any current accounts for programme managers or merchants. Funds received through the virtual payments address (VPA) handles provided by the bank are subsequently settled into the designated bank accounts of the programme managers or merchants with their respective banks.
Customer balances stood at 2,250 crore as on February 26
Merchant further said that customer balances stood at 2,250 crore as on February 26 and business volumes over the last three days have remained stable. “Our daily average current account and savings account (CASA) opening numbers are maintained at around 10,000 and our throughput remains in the range of1,300 crore per day. This is in line with the average and in certain cases even better, given that there were weekends,” he said.
Responding to queries on whether the bank had received any prior notice before Gupta’s arrest, Merchant said officials visited the bank’s office on February 26, seeking certain data and information related to some programme managers as part of their investigation. Later that evening, the authorities issued summons to Gupta, and early the next morning, the bank learnt that his remand had been authorised.
The management added that the entity under investigation works with multiple banks in the ecosystem and that the bank engages with it specifically for Unified Payments Interface (UPI) collect services.
A programme manager is a payment service provider that helps banks source merchants for digital payment services. The bank further said merchant onboarding is handled by the relevant business teams and not by the MD or CEO. He added that merchants are onboarded only on the pre-condition that they have existing banking relationships with other banks. The bank said it follows strict know-your-customer (KYC) guidelines both before and after merchant onboarding.
Chief Business Officer Shailesh Pandey said around 15-20% of the bank’s total throughput comes from payment aggregators, while the rest is from programme managers. The programme manager under investigation accounted for around 8-10% of the bank’s throughput.
On whether the arrest could affect the bank’s transition into a small finance bank, Merchant said the Reserve Bank of India has given the bank 18 months to complete the conversion. “We expect to complete the process before the stipulated timeline,” he added.