Fino Payments Bank’s board on 24 August 2026 approved a fresh three-month extension for Ketan Merchant as interim Chief Executive Officer effective 27 August 2026, subject to approval from the Reserve Bank of India (RBI). The decision, taken on the recommendation of the Nomination and Remuneration Committee (NRC), extends his tenure that began on 27 February 2026. It provides continuity at the top as the bank steers through a leadership transition and prepares to convert into a Small Finance Bank (SFB).
What Has Been Approved?
The Board of Directors of Fino Payments Bank Limited at its meeting on 24 August 2026 approved the extension of Ketan Merchant’s tenure as Interim Chief Executive Officer for a period of not exceeding three months effective 27 August 2026. The proposal was put forward by the Nomination and Remuneration Committee (NRC), which is the board committee responsible for assessing leadership appointments and compensation in banks. The board meeting, as disclosed in the regulatory filing, was held from 2:00 p.m. to 2:24 p.m. on the same day.
The extension is subject to approval of the RBI, as required under Section 35B of the Banking Regulation Act, 1949, which mandates prior regulatory clearance for appointment or reappointment of a Managing Director and Chief Executive Officer or any whole-time director in a banking company. Upon extension, Merchant will continue to be designated as Key Managerial Personnel (KMP) and Senior Managerial Personnel (SMP) of the bank. The bank informed the stock exchanges about the decision through a filing under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Who Is Ketan Merchant?
Ketan Merchant is a career banker with more than 27 years of experience in retail banking, finance and balance sheet management. He holds a Bachelor’s degree in Commerce from the University of Mumbai and is a qualified Chartered Accountant from the Institute of Chartered Accountants of India (ICAI). His professional journey includes stints at HSBC (1999 to 2006), Standard Chartered (2006 to 2014), Barclays, Bank M Group and Digicel Group (Fiji), with responsibilities spanning financial controls, liquidity management, budgeting, planning, and reporting under Indian GAAP and IFRS.
Merchant joined Fino Payments Bank in August 2018 and was appointed Chief Financial Officer (CFO) on 11 February 2019. In that role he headed finance, balance sheet management and strategic oversight for the bank and its group entities. He played a key role in the bank’s listing in November 2021, when Fino became the first payments bank in India to be listed on the stock exchanges. He has also driven the Data, Distribution and Digital (DDD) approach that underpins the bank’s Fino 2.0 vision.
His Role as Interim CEO Since February 2026
Merchant has been serving as Interim CEO since 27 February 2026, after the board tasked him to lead day-to-day operations in the absence of the Managing Director and CEO. The RBI first approved his appointment as interim CEO on 6 March 2026 for three months, or until the incumbent resumed office after a fit and proper reassessment. The regulator then extended the tenure by another three months from 27 May 2026, following a letter dated 25 May 2026 and a board recommendation made on 21 May 2026. The latest approval from 27 August 2026 is therefore a second consecutive extension, reflecting the regulator’s preference for short-term interim arrangements while a permanent leadership decision is finalised. During this period, Anup Agarwal was named Interim CFO to handle finance functions.
Why Was an Interim CEO Needed?
The need for an interim head arose after the arrest of Rishi Gupta, the long-serving Managing Director and Chief Executive Officer and a founding member of Fino Paytech Limited, the promoter of the bank. In late February 2026, Gupta was arrested by the Directorate General of GST Intelligence (DGGI) under the Central Goods and Services Tax (CGST) Act, 2017 and the State Goods and Services Tax (SGST) Act, 2017 in connection with an alleged GST evasion probe involving transactions of more than ₹840 crore routed through certain partner merchants and linked to online betting and gaming platforms.
After the arrest, the board stated that based on legal opinions no prima facie case was made out and that Gupta remained fit and proper to continue, subject to reassessment by the NRC and the board and a final view from the RBI. The RBI’s approval for Merchant as interim CEO was explicitly tied to this reassessment process. Gupta was later granted bail in March 2026. About a month before the arrest, the RBI had approved the extension of Gupta’s term as MD and CEO for another three years effective 2 May 2026. However, after remaining away from active charge, Gupta took voluntary retirement and resigned on 21 May 2026, ending a tenure that began at the bank’s inception. The leadership vacuum since then has been filled by interim arrangements approved in three-month tranches.
For context, Gupta is credited with taking Fino from a remittance-focused business correspondent network to a scheduled payments bank, achieving profitability within three years of launch and leading five consecutive years of profits from FY21 to FY25. He holds degrees from Shri Ram College of Commerce, University of Delhi, and is a rank-holder Chartered Accountant and Cost and Management Accountant with over 30 years of experience including earlier roles at Maruti Udyog, ICICI Bank and International Finance Corporation (IFC).
Understanding Fino Payments Bank
Fino Payments Bank Limited, headquartered at Mindspace Juinagar, Navi Mumbai, Maharashtra, is a subsidiary of Fino Paytech Limited. The Reserve Bank issued the licence under Section 22(1) of the Banking Regulation Act, 1949 and the bank commenced operations on 30 June 2017. Fino Paytech was one of 11 entities that received in-principle approval on 19 August 2015 to set up a payments bank. The bank was included in the Second Schedule of the RBI Act, 1934 from 1 January 2021, which gave it the status of a Scheduled Commercial Bank, allowing it to access liquidity facilities such as the RBI’s repo and reverse repo windows.
Fino operates an asset-light and distribution-heavy model. Instead of a large branch network, it leverages about 19 lakh merchant points and banking outlets covering about 97 percent of pin codes, plus a mobile platform FinoPay. The bank reported 1.43 crore customers and ₹1,847.1 crore in revenue in FY25 with its fifth consecutive year of profitability. It is the first payments bank to list in India, with its Initial Public Offering (IPO) in November 2021. The chairman of the board is Rajat Kumar Jain, who serves as Part-Time Chairman and Independent Director.
Payments Banks in India
Payments banks are differentiated banks created on the recommendation of the Nachiket Mor Committee (2013) on Comprehensive Financial Services for Small Businesses and Low Income Households to advance financial inclusion. The RBI issued final guidelines on 27 November 2014 for licensing payments banks and small finance banks.
A Payments Bank can accept demand deposits in the form of savings and current accounts, issue debit and ATM cards, and provide payments and remittance services through branches, business correspondents and digital channels. It cannot undertake lending and cannot issue credit cards. Deposits per customer were initially capped at ₹1 lakh, later revised to ₹2 lakh. The bank must maintain Cash Reserve Ratio (CRR) with the RBI and invest at least 75 percent of its demand deposit balances in Statutory Liquidity Ratio (SLR) eligible Government securities or Treasury Bills with maturity up to one year, holding the remaining up to 25 percent as deposits with other scheduled commercial banks for operational and liquidity management. It must maintain a minimum paid-up capital of ₹100 crore and a Capital Adequacy Ratio of 15 percent given its operational risk focus. It can distribute non-risk sharing products like mutual funds, insurance and pension products with prior approval.
| Feature | Payments Bank | Small Finance Bank (SFB) |
|---|---|---|
| Primary objective | Provide small savings and payments and remittance services to migrant workers, low income households and small businesses | Provide basic banking with credit to unserved and underserved sections including small farmers, micro and small enterprises |
| Lending allowed | No | Yes, with 75 percent of Adjusted Net Bank Credit for Priority Sector Lending, and at least 50 percent of loans up to ₹25 lakh |
| Deposits | Only demand deposits, up to ₹2 lakh per customer | All types, no per customer cap |
| Cards | Debit cards only | Debit and credit cards |
| Key investment rule | At least 75 percent of demand deposits in Government securities | As applicable to commercial banks |
| Capital requirement | ₹100 crore minimum, 15 percent capital adequacy | ₹100 crore minimum, to be raised to ₹200 crore within five years, 15 percent capital adequacy |
Fino’s Journey Toward a Small Finance Bank
Fino has been pursuing a larger banking licence to add credit to its fee-based, payments-led business. Under the RBI’s Guidelines for ‘on tap’ Licensing of Small Finance Banks in the Private Sector dated 5 December 2019, an existing payments bank that is controlled by residents and has completed five years of operations is eligible to convert into an SFB.
Fino applied for an SFB licence in the quarter ending December 2023. After assessment under the laid down procedure, the RBI granted in-principle approval on 5 December 2025 for conversion of Fino Payments Bank Limited into a Small Finance Bank. With this, Fino became the first payments bank in India to receive in-principle approval for SFB conversion. An in-principle approval gives the applicant 18 months to complete the transition by meeting conditions related to capital, governance, structure and technology, while continuing to operate as a payments bank until final approval.
The shift will allow Fino to accept larger deposits, extend loans to individuals and low-end small and medium enterprises, meet Priority Sector Lending (PSL) obligations, and build a stronger liability franchise. The bank has indicated that it will keep its core Payments++ model, use its merchant network as quasi-branches rather than opening many new branches, and invest in loan origination and digital credit analytics after spending about ₹300 crore on technology in the last three years. Management has said it hopes to start the lending business within one year of the in-principle approval, with a higher share of secured assets compared to unsecured lending.
Leadership stability remains important during this period because the conversion requires approval on capital plans, risk management, compliance and board composition. Continued interim leadership at the CEO level helps maintain regulatory confidence and business momentum, even as the bank’s recent financials show pressure. In FY26, total income fell to ₹1,587.9 crore from ₹1,847.1 crore in FY25, and profit after tax declined to ₹52.5 crore from ₹92.5 crore, with Q4 FY26 profit at ₹7.1 crore amid stress in cash management services and regulatory changes affecting remittance and Aadhaar enabled Payment System (AePS) businesses. Average deposits, however, rose about 20 percent year on year to ₹2,535 crore and CASA accounts grew about 22 percent to 1.75 crore.
Governance and RBI Approval Process
Appointment of a chief executive in a bank is tightly regulated to protect depositors and ensure sound governance. Under the Banking Regulation Act, 1949, the RBI must be satisfied that any person appointed to the top executive position is fit and proper and that remuneration is not excessive.
For private sector banks, including payments banks and SFBs, the process involves three layers. First, the Nomination and Remuneration Committee undertakes due diligence, obtains a Declaration and Undertaking from the candidate, and recommends a name or a panel to the board. Second, the Board of Directors passes a resolution if it is satisfied with the recommendation. Third, the bank submits the proposal to the Department of Regulation, RBI, through the Pravaah Portal in prescribed forms Form A and Form B. For a new MD and CEO, the bank must submit a panel of at least two names in order of preference at least four months before expiry of the incumbent’s term. For reappointment, the proposal must reach the RBI at least six months before expiry. The RBI’s timeline for conveying approval is typically 90 days after receiving complete information.
Interim arrangements are meant to be temporary. Under banking law, a vacancy in the office of chairman or managing director can be filled with RBI approval for a period not exceeding four months while a regular appointment is completed. In practice, the RBI has been approving interim CEO tenures in three-month blocks, as seen in Merchant’s case, to ensure periodic review. The regulator also assesses the bank’s compensation policy against the Basel Committee on Banking Supervision (BCBS) methodologies and the Financial Stability Board (FSB) principles on risk alignment. Any change in board composition must be reported promptly to the RBI in the prescribed format.
This governance framework explains why each extension for Merchant has been framed as subject to RBI approval and why the board has acted on the explicit recommendation of the NRC rather than unilateral appointment.
Key Takeaways
- The board of Fino Payments Bank on 24 August 2026 approved extension of Ketan Merchant as Interim CEO for not exceeding three months from 27 August 2026, subject to RBI approval.
- Merchant has served as Interim CEO since 27 February 2026 after appointment as CFO in February 2019, with earlier RBI approvals on 6 March 2026 and 25 May 2026 for three-month terms.
- The interim arrangement followed the February 2026 arrest of MD and CEO Rishi Gupta by the Directorate General of GST Intelligence in an alleged GST evasion case linked to online gaming transactions, with Gupta resigning via voluntary retirement on 21 May 2026.
- Fino Payments Bank, a subsidiary of Fino Paytech, commenced operations on 30 June 2017 under Section 22(1) of the Banking Regulation Act, 1949, became a Scheduled Bank on 1 January 2021, and was the first payments bank to list in India in November 2021.
- The RBI granted in-principle approval on 5 December 2025 for Fino’s conversion into a Small Finance Bank under the 5 December 2019 on tap licensing guidelines, making it the first payments bank to get such approval, with 18 months to complete transition.
