Fino Payments Bank has made a strong comeback in the stock market after going through one of the most difficult periods in its journey. Earlier this year, the bank faced legal issues involving its former Managing Director and CEO Rishi Gupta, which led to uncertainty among investors. However, recent business growth, better operational performance, and progress towards becoming a Small Finance Bank (SFB) have helped restore confidence.
The bank’s shares recorded a sharp rise during the week ending July 17, making it one of the top-performing new-age technology stocks of the week. Even though the bank is still recovering from financial challenges and leadership changes, investors are now paying more attention to its future growth plans.
CEO Exit and Leadership Changes After Legal Case
Fino Payments Bank faced a major setback in February 2026 when its Managing Director and CEO, Rishi Gupta, was arrested by the Hyderabad unit of the Directorate General of GST Intelligence (DGGI). The investigation was related to alleged GST evasion involving three third-party programme managers connected to the real-money gaming industry.
The bank later clarified that the investigation was not related to its own GST compliance. It also denied reports that the Enforcement Directorate (ED) was planning a money laundering investigation against the bank. According to Fino, it had no role in promoting gaming or betting activities and had no links with shell companies.
About a month later, Gupta was granted bail with conditions, including surrendering his passport and appearing before the authorities on fixed dates.
After his arrest, the bank appointed Chief Financial Officer Ketan Merchant as interim CEO after receiving approval from the Reserve Bank of India (RBI) and the board. Anup Agarwal took charge as interim CFO, and both executives later received extensions to continue in their roles.
Although the board reportedly found no prima facie case against Gupta and considered him fit for another term, he resigned in May 2026. Gupta chose to take voluntary early retirement after spending nearly 20 years with the organisation.
Financial Results Were Weak but Business Growth Improved
The legal issues came at a time when Fino Payments Bank was already reporting weaker financial performance. In the fourth quarter of FY26, the bank’s net profit fell by more than 70% compared to the same period last year. Revenue also declined as the bank reduced its focus on some transaction-based businesses.
One important decision was to stop onboarding new UPI Person-to-Merchant (P2M) merchants while improving its monitoring systems. At the same time, many customers shifted to zero-fee UPI payment platforms, which reduced transaction volumes.
To reduce its dependence on transaction income, the bank focused more on growing its Current Account Savings Account (CASA) business. CASA income became one of the biggest sources of revenue during the year.
Even though the financial results remained under pressure, the bank’s business performance started improving during May and June 2026. It opened more than three lakh new deposit accounts, taking its total customer base to around 1.8 crore. Average deposits also increased, while the cost of funds remained low.
Digital services also showed healthy growth. The number of digitally active customers increased, and more users started using the FinoPay mobile app.
The bank’s loan referral business also recorded strong growth. Since payments banks are not allowed to give loans directly, Fino works with lending partners and earns a commission for referring customers. Loan referrals increased sharply during June, showing strong demand for financial services through the bank’s network.
SFB Transition and Stock Rally Bring Fresh Hope
One of the biggest reasons behind the renewed optimism is Fino Payments Bank’s plan to become a Small Finance Bank. The RBI gave the bank in-principle approval for the transition in December 2025. The bank now has 18 months to complete the process and expects to begin operations as an SFB in phases from the first quarter of FY28.
The bank plans to invest ₹100 crore in this transition and aims to build a loan book of ₹8,000 crore to ₹10,000 crore by FY30. It also wants to maintain healthy returns while keeping credit costs under control.
To prepare for this change, Fino has partnered with an AI-based technology company to build a modern loan origination and collections platform. This system is expected to support its future lending business after the SFB conversion.
The improving business outlook has already helped the stock recover. After falling to a record low in March following the CEO’s arrest and regulatory concerns, the share price has bounced back strongly. During the week ending July 17, the stock gained nearly 30%, supported by strong business updates for June, including higher deposits, more customers, and rapid growth in loan referral business.
Trading volumes also increased sharply, showing that investors have once again started taking interest in the stock.
However, institutional ownership remains low as foreign institutional investors reduced their holdings earlier this year. Promoters continue to hold a 75% stake in the company, while public shareholders own most of the remaining shares.
Although challenges still remain, Fino Payments Bank has shown clear signs of recovery. Strong business performance, growing digital adoption, and its upcoming transition into a Small Finance Bank have improved market sentiment. Investors will now closely watch how successfully the bank completes this transition and whether it can maintain its current growth momentum in the coming years.