Equitas SFB Shares Fall 20% Intraday After Vasudevan Announces Resignation

The bank’s board has requested P N Vasudevan to remain as MD and CEO until his successor takes charge. He denied an actual conflict of interest involving his daughter’s NBFC.

Equitas Small Finance Bank shares fell as much as 20% on Thursday, October 29, after the lender announced that Managing Director and Chief Executive Officer P N Vasudevan had submitted his resignation.

The announcement followed persistent investor concerns over a perceived conflict of interest involving his daughter’s association with a non-banking financial company. Vasudevan disputed that there was an actual conflict.

The board has asked him to continue until a successor takes over, allowing time for the bank to complete its leadership-selection process.

Shares hit lower circuit during trading

The stock touched ₹52.11 during the session, reaching its 20% lower circuit, according to Moneycontrol.

The publication reported an NSE closing price of ₹57.17, down 12.22%. These figures distinguish the sharpest intraday decline from the reported closing performance; the stock should not be described as having closed 20% lower on that basis.

What Vasudevan said about the concerns

In his resignation letter, Vasudevan said his daughter was a co-promoter of an NBFC that received an RBI licence in 2023. He maintained that the relationship had been disclosed to the bank’s board and the regulator.

According to his account, investors continued to question the arrangement despite those disclosures.

He said the bank had undertaken only one short-term deposit transaction with the NBFC around two-and-a-half years earlier, and that the deposit was repaid at maturity. He also said the bank had not extended loans to the company.

“Sometimes perceptions are stronger than reality,” Vasudevan wrote, explaining his decision to remove what he considered an uncertainty affecting shareholders and employees. These statements represent his explanation of the relationship, rather than an independent regulatory finding.

Successor search will include internal and external candidates

The board has directed its nomination and remuneration committee to identify candidates from within and outside the bank.

The selected candidate’s appointment will require RBI approval and other applicable regulatory clearances. The request for Vasudevan to remain during the transition separates the announcement of his intention to leave from the date on which he ultimately relinquishes office.

Regulatory questions should be distinguished from findings

Moneycontrol previously reported that the RBI had contacted Equitas management to understand the bank’s relationship with Unico Housing Finance, the company associated with Vasudevan’s daughter.

A request for information does not, by itself, establish wrongdoing. The resignation reports cited here do not identify a final RBI finding that Vasudevan breached conflict-of-interest requirements.

Leadership transition follows a long association

Vasudevan has been associated with Equitas since its beginnings as a microfinance institution in 2007 and oversaw its transition into a small finance bank in 2016.

The announcement places succession planning at the centre of the lender’s immediate agenda. Further disclosures on the appointment process, regulatory approvals and handover arrangements will clarify how the transition proceeds.