Fino Payments Bank board has accepted Rishi Gupta's resignation on Thursday even after the board of the lender had found him "fit and proper" to lead Fino as managing director and chief executive officer for a second term.Gupta was earlier arrested in a case related to a fraud probe into goods and service taxes (GST). He was later released on bail about a couple of months ago.The bank announced Thursday that Gupta sought early retirement from the leadership position Thursday.Simultaneously, the board approved the extension of interim chief executive Ketan Merchant's tenure for a period not exceeding three months effective May 27. This is, however, subject to regulatory approval. Fino is seeking to become a small finance bank and is navigating leadership challenges in the aftermath of Gupta’s arrest.Merchant, the chief financial officer, was appointed as the interim head after Gupta was arrested on February 27 in an investigation related to alleged fake goods and services tax invoices by a business partner of Fino causing loss of income for the government. Gupta, one of the founding members of Fino, was subsequently granted bail on March 26. Before his arrest, the board had approved his extension as the head of the organisation. But the turn of events had forced the board to keep the process of his reappointment on hold until a reassessment on his role in the GST case. "Based on the consideration of the documents available with the bank as on date, including the legal opinions and reports received and the facts emanated therefrom, the board is of a view that no prima facie case could be made out against Mr Rishi Gupta," the board said on May 21, even as it promptly accepted Gupta's resignation.Meanwhile, the board also extended Anup Agarwal's tenure for up to three months as an interim CFO with effect from July 6.