Fino Payments Bank Board Meets Amid Speculation Over CEO's Tenure
Fino Payments Bank Leadership in Limbo as Board Meets to Decide Rishi Gupta's Fate
The board of Fino Payments Bank is set to meet on April 29 to decide the fate of its leadership team, including the continuation of Rishi Gupta as managing director and chief executive officer. Despite receiving a three-year tenure approval from the Reserve Bank of India (RBI) on January 28, Gupta's reappointment is yet to be ratified by shareholders.
Gupta was arrested by the Directorate General of GST Intelligence (DGGI) in Mumbai in February on allegations of goods and services tax (GST) evasion and wrongful claim of input tax credit. The alleged GST evasion could total to Rs 840 crore and be linked to transactions worth Rs 3,000 crore or more, according to reports.
The RBI is generally wary of considering a candidate as "fit and proper" if the person is serving a jail term or is out on bail. Given the circumstances surrounding Gupta's arrest, it is tough to dismiss the charges as baseless or frivolous, making it tricky for him to continue as MD & CEO of the bank.
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| Candidate | Shareholder Support | Vote Result |
|---|---|---|
| Rishi Gupta | Promoters and Public Institutional Shareholders | Passed (10% of total vote) |
| Rishi Gupta (Remuneration) | Public Non-Institutional Shareholders | 90.22% against, passed due to promoter and institutional shareholder support |
The bank initially distanced itself from Gupta, stating that the arrest related to charges against him and did not involve the bank. However, in a later call with investors, the bank acknowledged that there were deficiencies regarding GST compliance by some programme managers, who had a relationship with other banks, including Fino.
Gupta was released on bail on March 26, but the odds appear to be stacked against him. With just a month to go for the tenure of interim CEO Ketan Merchant to conclude, an "informal" CEO search is reportedly underway. Some shareholders continue to support Gupta, but the growing dissent among investors may make it challenging for him to continue in his role.
Fino Payments Bank is undergoing a critical transformation into a small finance bank, and any shake-up in its leadership could hit the transition process. The RBI may hold back its decision to grant a small finance bank licence to Fino, according to a report by Moneycontrol on March 2.
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Investor Takeaway
Investors should be cautious about the potential impact of the CEO's tenure on the bank's performance.
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