Equitas SFB Shares Plummet 12% Following CEO's Resignation
Equitas Small Finance Bank's stock dropped significantly after P N Vasudevan announced his resignation amid conflict of interest concerns.
Equitas SFB shares fell by 12.22%, hitting a low of Rs 52.11.
CEO P N Vasudevan resigned due to perceived conflict of interest linked to his daughter's NBFC.
The bank's board is now tasked with finding a new MD and CEO.
Shares of Equitas Small Finance Bank experienced a sharp decline of 12.22% on Thursday, closing at Rs 57.17, following the announcement of the resignation of Managing Director and CEO P N Vasudevan. The stock had previously hit a low of Rs 52.11, marking a significant drop of 20%. This downturn was triggered by concerns surrounding a potential conflict of interest related to Vasudevan's family connections.
Vasudevan's resignation, effective October 29, 2026, was communicated through an exchange filing where he expressed his intention to focus on personal and social initiatives. He disclosed that his daughter is a co-promoter of a non-banking financial company (NBFC) that was granted a license by the Reserve Bank of India (RBI) in 2023. Despite maintaining that there was no conflict of interest, he acknowledged that investors had raised concerns about this issue over the past three years.
In his resignation letter, Vasudevan clarified that the bank had no financial transactions with the NBFC, except for a short-term deposit made two-and-a-half years ago, which had been repaid. He emphasized that the bank's operations were compliant with the Banking Regulation Act. However, he noted that the ongoing perception of a conflict was detrimental to the bank's stock performance and overall value creation for shareholders and employees.
The resignation has prompted the bank's board to direct the Nomination and Remuneration Committee to identify potential candidates for the MD and CEO position, both from within the organization and externally. This move comes as the RBI had previously sought clarification from Equitas regarding the relationship between the bank and the NBFC linked to Vasudevan's daughter, which was incorporated in March 2023 and has raised approximately Rs 1,000 crore from private equity firms.
Looking ahead, the bank aims to address the concerns raised by investors and restore confidence in its stock performance. The board's search for a new leader will be crucial in navigating this transitional phase and ensuring that the bank's financial strength is accurately reflected in its market valuation.
