Equitas SFB shares hit 20% lower circuit as MD & CEO resigns amid conflict of interest

In his letter, Vasudevan said his daughter is the co-promoter of a non-banking financial company (NBFC) that received a licence from the Reserve Bank of India (RBI) in 2023. He said the matter had been disclosed to the bank's board and the RBI through various declarations. He said his position as the bank's MD and his daughter's role as co-promoter of the NBFC were within the regulatory framework of the Banking Regulation Act.

Vasudevan said investors had repeatedly raised concerns about a perceived conflict of interest during meetings over the past three years. He maintained that there was no conflict of interest, as the bank had no transactions with the NBFC apart from a short-term deposit made around two-and-a-half years ago, which was repaid on maturity. He added that the bank had not extended any loans to the NBFC.

Despite his explanations, the perception of a conflict of interest continued to persist, he said, adding that investors had told him the issue was weighing on the bank's stock and affecting value creation for shareholders and employees. "Sometimes perceptions are stronger than reality," Vasudevan said in the letter. He said he had decided to step down to remove the concerns surrounding the perceived conflict of interest and expressed confidence that the stock would reflect the bank's financial strength once the issue was resolved, benefiting all stakeholders, including employees.

The board has advised the Nomination and Remuneration Committee (GNRC) to identify and recommend suitable candidates, both internal and external, for the Board's consideration and approval. Moneycontrol earlier exclusively reported that the RBI had reached out to the top management of Equitas to understand the nature of the relationship between the bank and Unico Housing Finance, the non-bank floated by Vasudevan’s daughter. Unico was incorporated in March 2023 and has raised about Rs 1,000 crore in FY26 from two home-grown private equity firms.