Description

SEBI settlement order against Fino Payments Bank for failure to make timely and complete disclosure of material events regarding employee frauds under LODR Regulations.

Summary

SEBI issued Settlement Order No. SO/SM/KS/2025-26/8256 against Fino Payments Bank Limited (PAN: AABCF1125D) for violations of LODR Regulations 30(3), 30(6), and 30(7) read with clause 9 of Para B of Part A of Schedule III, and related provisions of SEBI Circular dated July 13, 2023. The Bank failed to make timely and complete disclosure of material events concerning fraudulent investment schemes perpetrated by its employees. Despite receiving KPMG’s investigation report on November 08, 2023, the Bank did not make adequate disclosure within the mandatory 24-hour timeline and failed to provide subsequent updates.

Key Points

  • Adjudication proceedings initiated under Section 15-I of SEBI Act, 1992
  • Show Cause Notice (SCN) No. SEBI/HO/EAD/EAD5/P/OW/2024/31639/1 issued on October 08, 2024
  • Settlement Application No. 8256/2024 filed by Fino Payments Bank Limited
  • Original Adjudicating Officer: Shri Amar Navlani (appointed August 12, 2024)
  • Transfer of case to new Adjudicating Officer on September 11, 2025
  • Fifteen (15) complaints received alleging fraudulent investment schemes by Bank employees
  • Event value exceeded materiality thresholds under Regulation 30(4)(i)(c) of LODR
  • Share price declined significantly during the relevant period
  • KPMG investigation report received on November 08, 2023
  • Bank failed to disclose within 24 hours and provide subsequent updates as mandated

Regulatory Changes

No new regulatory changes introduced. This order enforces existing disclosure requirements under:

  • SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 - Regulations 30(3), 30(6), and 30(7)
  • Clause 9 of Para B of Part A of Schedule III of LODR Regulations
  • Clause 9 of Para B of Annexure I and clause 9 of Table I of Annexure II to SEBI Circular SEBI/HO/CFD/CFD-PoD-1/P/CIR/2023/123 dated July 13, 2023

Compliance Requirements

  • Listed entities must disclose material events within 24 hours of occurrence or receipt of information
  • Material events include frauds/defaults by employees where the value exceeds materiality thresholds under Regulation 30(4)
  • Complete and accurate disclosure required, with subsequent updates as mandated
  • Investigation reports from external agencies (like KPMG) triggering disclosure obligations must be acted upon promptly
  • Entities must assess materiality based on quantitative thresholds and qualitative impact including share price movements

Important Dates

  • August 12, 2024: Shri Amar Navlani appointed as Adjudicating Officer
  • August 13, 2024: Appointment communicated to Adjudicating Officer
  • October 08, 2024: Show Cause Notice issued to Fino Payments Bank
  • September 11, 2025: New Adjudicating Officer appointed due to transfer
  • September 19, 2025: Appointment communicated to new Adjudicating Officer
  • November 08, 2023: KPMG investigation report received by the Bank (disclosure deadline: within 24 hours)

Impact Assessment

Market Impact:

  • Significant share price decline observed during the period of non-disclosure
  • Material information withheld from investors affecting informed decision-making
  • Fifteen complaints involving employee frauds indicate systemic internal control issues

Operational Impact:

  • Reputational damage to Fino Payments Bank Limited
  • Highlights governance and internal control deficiencies
  • Sets precedent for disclosure obligations related to employee frauds in banking sector

Regulatory Impact:

  • Reinforces strict enforcement of disclosure timelines under Regulation 30 of LODR
  • Emphasizes materiality assessment obligations for listed entities
  • Demonstrates SEBI’s focus on timely and complete disclosure of material events
  • Settlement mechanism allows resolution without protracted adjudication proceedings

Impact Justification

High severity disclosure violation involving material fraud events, share price impact, and failure to comply with mandatory disclosure timelines under LODR Regulations 30(3), 30(6), and 30(7).