In our Money & Machines edition today, on the fintech side we write about the uneasy silence and fear hovering over the arrest of Fino Payments Bank CEO Rishi Gupta as he awaits hearing; and on the AI front, we examine Sarvam AI’s new startup programme and why it may be less about startup support and more about building a future enterprise customer base, a strategy long used by cloud companies to seed ecosystems around their platforms. |
A CEO arrested, a hearing delayed, an industry watching |
The arrest of Rishi Gupta, managing director and CEO of Fino Payments Bank, has triggered an unusual debate in India's fintech and banking circles. Not because investigations into tax evasion are surprising – but because of who was picked up, and how. |
Gupta challenged the arrest in the Telangana High Court. The matter came up before a bench of Justice A. Krishna Reddy and Justice G.M.M. on March 3, argued by senior counsel Dr. Abhishek Manu Singhvi. It was listed for today i.e. Friday, March 6. It has now been pushed to Monday. If you're keeping count, that's close to 10 days since the arrest, and the CEO of a listed, RBI-regulated payments bank is still in custody. |
Not sure about the history but this is probably the first time in India that the CEO of a listed company has been arrested over a tax evasion allegation. For Gupta, it has been quite a month. Only weeks earlier, the Reserve Bank of India had approved his continuation as CEO for another three years, and the bank itself had just received in-principle approval to convert into a small finance bank. |
The Head and Tale was the first to report that Gupta's arrest was connected to ongoing tax evasion investigation on Fino Bank's business partner – a TSP called Wegofin. The allegation is that the bank enabled tax evasion linked to online gaming transactions routed through a partner entity. |
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The question now being asked across the industry is 'If a partner entity evaded taxes, does that automatically justify arresting the CEO of a regulated bank?' |
The DGGI's theory – as per media reports – is that Gupta was one of the "masterminds" behind routing nearly Rs 3,000 crore through a network of fake merchants, causing a tax loss of approximately Rs 840 crore. |
To understand the debate, one must first understand the structure behind the alleged violation. Our September 2025 investigation – has now been made ‘Free to Read’ – went deep into how banks, TSPs, and payment aggregators worked together to process transactions for shadow gaming merchants – operators who had been quietly onboarded as e-commerce merchants by payment aggregators and banks. The commissions were lucrative. |
Several banks featured in that reporting. Fino was not alone. But Fino's CEO is the one in custody. |
A senior industry official put it, " If such action is taken against a large bank, deposits are at risk. People will queue up to take their deposits out. Also, most of the times, it is seen as what percentage of business is at fault. For a bigger bank, maybe such transactions accounted for 3-5% of total business. For a smaller fintech, the ratio could be 40-50%. So there is a difference. We saw the case of Navi by the RBI. Navi had individual money, not much investor money. It's easier to pick entities with less baggage to give a warning to the ecosystem." |
He has a point. Smaller entities are easier targets. |
The argument essentially suggests enforcement agencies sometimes choose targets where systemic consequences are manageable. |
There may be some logic in that reasoning. |
But then it also raises another question: If enforcement is guided by systemic convenience rather than uniform application, what message does that send to the ecosystem? |
Another curious element in the case concerns Wegofin and its directors – the entity at the centre of this entire investigation and the entity actually accused of evading GST – are apparently already out on bail. This could not be independently verified, but if accurate, it is bit strange… |
Again, the courts will ultimately decide where liability lies. |
Meanwhile, investor TV Mohandas Pai raised the issue publicly and tagged finance minister Nirmala Sitharaman. In a rare move, she responded publicly, "Thanks for sharing. Will check." That was February 28. Since then, Gupta has remained in custody, the hearing has been postponed once, and the ecosystem has gone largely quiet. Even those who care –and many do – seem unsure what can actually be done when enforcement agencies are this "powerful". |
As a media outlet, our job is to find facts, verify them, corroborate them with multiple sources, and put them out. That is what we will keep doing. But the overall silence is loud enough to not be noted. |
While the enforcement agencies are busy investigating banks and fintechs in online gaming cases – here's another point worth noting. The Online Gaming Act received Presidential assent on August 22, 2025. But the fact of the matter is it has still not been formally notified in the Gazette of India. Sources suggest the sheer scale of money flowing through this ecosystem makes a clean ban politically and commercially complicated. Don't be entirely surprised if it resurfaces in some reformed avatar. |
Otherwise, imagine if both gaming companies and shadow gaming merchants were genuinely being cracked down on, how are so many TSPs still operating, processing, and apparently flourishing? What exactly are they processing? These are not rhetorical questions. They are the questions that the arrest of one bank CEO does very little to answer. |
The Fino investigation may produce evidence that justifies everything. But right now, what it has produced is a CEO in custody, a bank's stock down, anxious customers, and an industry wondering who is next – and why. |
That is not a great advertisement for ease of doing business. |
The hearing is on Monday. We'll watch. |
-by Arti Singh |
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Why Sarvam wants startups to build on its AI stack |
Sarvam AI, widely seen as the poster child for India’s homegrown AI model efforts, earlier this week joined a list of venture-backed startups launching their own startup programmes. |
The Bengaluru-based company, backed by investors including Peak XV Partners, Lightspeed and Khosla Ventures, unveiled the Sarvam Startup Program aimed at developers building AI applications. |
“AI is the era for builders. We want to compound that momentum by powering the startup ecosystem with high-quality models and tools so they can create with full agency,” the company said while inviting applications for the Sarvam Startup Program. |
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Selected startups will receive six to 12 months of API credits along with access to Sarvam’s speech, translation, chat and document intelligence APIs. The company is also offering support for more than 22 Indian languages, priority access to its engineering team and co-branded launch support. |
Such programmes are not entirely new in India’s startup ecosystem. Over the years, several venture-backed startups have launched their own startup programmes, accelerators and even funds to support younger companies. For instance, in 2017, fintech major Paytm, rolled out its startup incubator programme, named the 'Indian Open Source Project Incubator' to support technology developers and startups in fields like AI, financial inclusion, and AR/VR. Monetary support was not mentioned as part of the programme. Paytm later partnered with the Ministry of Electronics and IT (MeitY) and the Department for Promotion of Industry and Internal Trade (DPIIT) to support deep-tech and fintech startups, respectively, including funding opportunities. |
Apart from Paytm, payments company Razorpay launched its startup programme, Razorpay Rize, in 2021 to help founders on their startup journey with vibrant communities, dedicated programs, and incorporation services. Subsequently in 2024, Razorpay teamed up with Peak XV Partners and Lightspeed to launch a venture investment programme to back early-stage B2B startups with cheques of up to $1 million. |
Similarly, Dream Sports, the parent company of Dream11, launched Dream Capital in 2021, a $250 million corporate venture fund to invest in startups across sports, gaming and fitness. |
Eyewear retailer Lenskart has also set up its own investment arm, the Lenskart Vision Fund, to back startups working on technologies and products related to eyewear and retail. |
Sarvam’s initiative, however, like Paytm and Razorpay’s in their early days is at a very nascent stage. The AI startup is not offering direct capital but infrastructure support aimed at encouraging startups to build products on top of its models. |
For Sarvam, which could potentially be looking to raise its next round of capital, after it raised a large Series A funding of over $40 million in late 2023, this arrangement works not just to gain goodwill and visibility but primarily to build a future enterprise customer base. |
As a venture capital investor recently told The Head and Tale, “I don’t expect the government-backed Indian foundation models (like Sarvam AI) to see significant commercial adoption in the near term. The reason is simple as enterprises choose models that solve problems effectively, not just those with sovereign branding.” |
“India also has limited compute capacity of roughly 40,000 GPUs nationwide, with only a fraction operational. That makes it difficult to train models that compete with frontier labs. So, while the research may be strong, widespread commercial adoption may take until around 2027,” added the investor. |
So, for Sarvam, the programme also doubles up as a distribution strategy. By nudging startups to build their products around its APIs and language models, the company increases the chances that its technology becomes embedded in a new generation of AI applications. If those products gain traction, Sarvam not only gains long-term customers but also valuable usage data that can help improve its models. |
In that sense, the programme is less about immediate startup support and more about long-term platform adoption. |
Notably, the structure of Sarvam’s programme also mirrors a strategy long used by cloud infrastructure providers. Companies such as Amazon Web Services, Google Cloud and Microsoft Azure have for years offered startups generous cloud credits, technical support and marketing visibility to encourage them to build their products on their platforms. |
For Sarvam, the real test will not be how many startups sign up for the programme, but how many eventually build products that rely on its models at a time when developers have no shortage of global AI models to choose from. In the race to build India’s AI ecosystem, winning developers could matter as much as building the technology itself. |
-by Joseph Rai |
