After the arrest of Rishi Gupta, MD and CEO of Fino Payments Bank, the bank in its clarification on Monday said that it has not withheld any kind of GST dues and it is fully following all the regulatory provisions. The bank clarified in a regulatory filing that the investigation by the Directorate General of GST Intelligence (DGGI) pertains to the actions of program managers associated with several banks and not to the bank’s GST compliance. The bank said that it or its officers have no direct or indirect connection with the business activities of the respective program managers.
Under which sections was Gupta arrested?
According to the news, DGGI has arrested Gupta for alleged violation of GST law. They were detained under sections 132(1)(a) and 132(1)(i) of the CGST and SGST Act, 2017. The investigating agency is probing illicit money flow related to online money gaming through alleged shell companies and payment aggregators. The bank also reiterated that it neither promotes nor indulges in betting activities through any forum or platform.
Necessary due diligence was followed
The bank said the processes related to merchant onboarding and program manager are in line with regulatory standards and all required due diligence has been followed. According to the bank, merchant onboarding is done by the respective business teams and not by the MD-CEO. Also, it is mandatory for the merchants referred by the Program Manager to have an existing banking relationship with another bank, so that UPI transactions can proceed smoothly.
18 month time frame
Meanwhile, the bank has been given a deadline of 18 months by the Reserve Bank of India to complete the process of conversion into a small finance bank. The management has expressed confidence that this process will be completed before the scheduled time. There is a stir in the industry due to the arrest incident. Organizations like Payment Council of India (PCI) and Startup Policy Forum SPF have expressed concern over this matter. PCI wrote a letter to Finance Minister Nirmala Sitharaman seeking prompt intervention and a balance in enforcement action.
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