PN Vasudevan quits Equitas SFB as MD & CEO citing ‘perceived conflict of interest’

“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. Vasudevan said the perceived conflict had repeatedly come up in investor meetings over the past three years, despite the absence of any significant business relationship between the two entities. “In reality there is no conflict of interest, since there is no transaction at all between our bank and the said NBFC (except one short term deposit about 2 1/2 years back, which was duly repaid on maturity).

There are no other transactions including any loans by the bank to the NBFC," he said. Unico Housing Finance, the NBFC floated by Vasudevan’s daughter, has been at the centre of questions around the relationship. Earlier reports suggested that the RBI had reached out to the board and top management of Equitas SFB to understand the nature of the relationship between the bank and Unico Housing Finance.

Vasudevan, however, said the relationship had been disclosed to the bank’s board and the RBI through various declarations. He alleged that despite repeated clarifications, investors had flagged the issue as an overhang on the stock, affecting value creation for both shareholders and employees. “Sometimes perceptions are stronger than reality,” he said, adding that it was important to remove the ‘overhang’ arising out of the perception issue.

“I would like to step down from the bank. I am sure that with this ‘overhang’ removed, the stock should reflect the financial strength of the bank,” Vasudevan wrote. The market reaction, however, went in the opposite direction. Equitas SFB shares fell 20% to the lower circuit of ₹52.11 on the NSE following the announcement. Vasudevan said he would continue to discharge his responsibilities as MD and CEO until a successor takes over.

In its exchange filing, Equitas SFB said Vasudevan had conveyed his intention to step down to pursue certain personal and social initiatives to contribute to society. The Board of Directors took note of the resignation and agreed with the same. This is not the first time Vasudevan has sought to step away from the role. In May 2022, he announced his decision to resign as MD and CEO to focus on the public charitable trust he had set up with his wife.

He later revoked his resignation after accepting a suggestion from then chairman Arun Ramanathan to continue leading the bank. Equitas said Vasudevan had been instrumental in the institution’s journey since its inception as a microfinance institution in 2007 and its subsequent transition into a small finance bank in 2016. “Under his leadership, the Bank has navigated multiple phases of growth and transformation, thus laying a strong foundation for its continued progress and success,” it said.

The resignation comes even as the lender reported its highest-ever quarterly net profit of ₹218 crore in Q2FY27, a near ten-fold increase, driven by a surge in core interest income and lower provision expenses. Gross advances grew 30% year-on-year crossing the ₹50,000-crore milestone. Total deposits rose 19% also crossing ₹50,000 crore. Consequently, the bank’s total business exceeded ₹1 lakh crore in Q2FY27.

Asset quality also improved during the quarter. Gross non-performing assets (NPAs) declined 13 basis points quarter-on-quarter to 2.29% in Q2FY27. Net NPAs improved marginally to 0.70% from 0.71%.