Equitas SFB shares crash 20% as CEO Vasudevan quits over ‘conflict’ involving daughter’s NBFC

Shares of Equitas Small Finance Bank plunged nearly 20% on Thursday after managing director and chief executive officer P. N. Vasudevan announced his decision to step down, citing a persistent perception of conflict of interest linked to his daughter’s association with a non-banking financial company (NBFC).

The stock fell 19.99% to close at ₹52.11 on the NSE, against its previous close of ₹65.13.

In his resignation letter dated October 29, Vasudevan said investors had repeatedly raised concerns about the perceived conflict over the past three years, despite his explanations that there was no conflict in the bank’s dealings with the NBFC.

“My daughter is the co-promoter of an NBFC which has received its licence from RBI in 2023,” he wrote, adding that the relationship had been disclosed to the bank’s board and the Reserve Bank of India as required.

Vasudevan says perception is hurting stock

Vasudevan said there had been no transactions between Equitas Small Finance Bank and the NBFC, except for one short-term deposit placed around two-and-a-half years ago, which was repaid on maturity. He said there had been no other transactions, including loans from the bank to the NBFC.

“Despite my explaining the above to investors, the perception of conflict continues to persist,” he wrote.

He added that investors had told him the perceived conflict-of-interest “overhang” was causing the stock to underperform and affecting value creation for both shareholders and employees.

“Sometimes perceptions are stronger than reality,” Vasudevan said in the letter.

“Under the circumstance, it is important that we remove the ‘overhang’ arising out of the perception issue. Accordingly, I would like to step down from the bank,” he wrote.

Vasudevan said he was confident that removing the overhang would help the stock reflect the bank’s financial strength, benefiting all stakeholders, including employees.

CEO to continue until successor takes over

The bank’s board has accepted his resignation and asked him to continue as MD and CEO until a successor takes over. The nomination and remuneration committee will identify suitable candidates from within and outside the bank, with the appointment subject to approval from the RBI and other applicable authorities.

Vasudevan said he would continue discharging his responsibilities until his successor takes over.

He also spoke about the bank’s progress, saying total business crossed ₹1 lakh crore in the September 2026 quarter, when it reported its highest-ever quarterly profit of ₹218 crore.

Vasudevan had spent 20 years at Cholamandalam and another 20 years at Equitas, after a brief stint at DCB Bank. He said he hoped to take a break to focus on building a corpus for a trust and dedicating it to a different segment of society.