Equitas SFB CEO Vasudevan quits over 'perceived conflict of interest'

Equitas Small Finance Bank (SFB) Managing Director and Chief Executive Officer P N

Vasudevan resigned on Thursday, barely three months after his tenure was extended by the board until July 2029, citing persistent investor concerns over a perceived conflict of interest arising from his daughter’s association with a non-banking financial company (NBFC).

Following the announcement, the lender’s shares fell 20 per cent in intra-day trade, hitting the lower circuit, before closing over 12 per cent lower at ₹56.99 on the BSE.

In his resignation letter dated October 29, Vasudevan said the perception of a conflict of interest had persisted despite his explanations to investors that there were no ongoing transactions between the bank and the NBFC. He said the issue was weighing on the bank’s stock performance and affecting value creation for shareholders and employees.

“My being the MD of a bank and my daughter being the co-promoter of an NBFC are within the regulatory framework of the Banking Regulations Act,” he said in the letter addressed to the bank’s chairman.

Vasudevan said the NBFC promoted by his daughter received a licence from the Reserve Bank of India (RBI) in 2023. His association with the bank and her role in the NBFC had been disclosed to the board and the RBI, as required, he added. He said there had been no transactions between Equitas SFB and the NBFC, except for a short-term deposit placed around two and a half years ago and repaid on maturity. There had been no other transactions, including loans, between the two entities, he said.

“Sometimes perceptions are stronger than reality,” Vasudevan said, adding that investors had repeatedly raised the issue at meetings over the past three years. “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 said, expressing hope that the stock would better reflect the bank’s financial strength following his exit.

The bank’s board took note of his resignation at a meeting on Thursday and requested him to continue as MD & CEO until his successor takes over. The nomination and remuneration committee will identify suitable internal and external candidates, whose appointments will be subject to RBI and other applicable regulatory approvals.

Vasudevan founded Equitas as a microfinance institution in 2007 and led its transition into an SFB in 2016. Before founding Equitas, he spent two decades at Cholamandalam, followed by a brief stint at DCB Bank.

In his letter, he said he hoped to take a break after spending around 20 years at Equitas and focus on building a corpus for a trust dedicated to serving a different segment of society.

The leadership transition comes as the bank looks to build on its recent business growth. Vasudevan said the bank’s total business crossed ₹1 trillion in the quarter ended September 2026, while it recorded its highest ever quarterly profit of ₹218 crore.

The SFB has set a five-year plan through March 2031, targeting annualised growth of more than 20 per cent in advances and deposits, and aiming to reach around ₹1.2 trillion in both. Vasudevan said advances and deposits had grown at compound annual growth rates (CAGRs) of about 26 per cent and 27 per cent, respectively, over the past five years.

He also said unsecured microfinance accounted for around 10 per cent of the bank’s advances, while its branch network had grown to about 1,100.

Interestingly, this is the second time that Vasudevan is resigning from the post. In May 2022, he had resigned as the MD & CEO but withdrew his decision in December 2022, following the board’s request that he continue leading the bank. His plan then was to devote more time to his social service initiatives.

The SFB’s board said it did not expect the leadership transition to affect the lender’s long-term plans.