Fino Payments Bank Stock Bounces Back Following Steep 15% Fall

Fino Payments Bank shares recovered well from an early 14% fall to trade modestly up on 3 March, erasing all intraday losses. Shares fell on fears associated with Rishi Gupta's (the company's MD and CEO) detention. In morning trades, shares of Fino Payments Bank were trading at INR 192.7, up 0.3% from the previous day's low, which indicated a decline of about 15% from the previous day's high. At its present pricing, the stock has lost approximately 10.7% in the last year, bringing the bank's market capitalisation to approximately 1,600 crore Indian rupees.

Fino Clarifies the Arrest of Gupta

The news of Gupta's detention under the goods and services tax law caused Fino Payments Bank stock to drop precipitously in the early going after the bank disclosed the news. Fino made it clear in a late Friday filing that the arrest was unrelated to the bank's GST compliance. The detention is, however, related to an investigation involving certain business partners.

The lender said the examination involved programme managers from other banks in Monday's following statements to exchanges. The bank's leadership reportedly assured analysts during a conference call that it had implemented prudential buffers and improved monitoring to maintain stability. The probe is focused on alleged GST irregularities affecting programme managers, not the bank, according to Chief Financial Officer Ketan Merchant, who has been designated Head of the Organisation in Gupta's absence.

Why Gupta was Arrested?

According to Merchant, Gupta is being investigated for allegedly underreporting GST and his participation with a partner firm that provided real money gambling services. He went on to say that neither the bank nor Gupta, in his official capacity, is involved with the programme manager's business dealings.

He disputed the assertions that the bank was liable for GST, calling them "completely baseless and factually incorrect" and referencing the favourable opinion of the board of advisors. This news arrives barely one month after Gupta was reappointed as MD and CEO by the Reserve Bank of India. In a separate development, Fino was granted permission by regulators in December to transition into a small finance bank. This change would grant them the authority to receive bigger deposits and provide credit products.