Equitas shares fall more than 12% after CEO resigns amid conflict-of-interest concerns
Key Facts
B.N. Vasudevan resigned as managing director and chief executive of Equitas Small Finance Bank on October 29, 2026, saying investor concerns over a perceived conflict of interest had persisted because of his daughter’s association with a non-banking finance company. The stock fell 20% during trading that day, touching its lower circuit, before closing down more than 12% at 56.99 rupees on the Bombay Stock Exchange. In his resignation letter, Vasudevan said the perception had persisted and noted that investors had raised the issue at meetings over the past three years. He added that the continued concerns had affected the stock’s performance and value creation for shareholders and employees. The resignation came as the bank reported its highest quarterly profit in its history, putting the leadership transition in focus alongside its financial performance.
Vasudevan said his daughter had been involved in promoting a non-banking finance company that received a license from the Reserve Bank of India in 2023. He said there had been no transactions between the company and the bank, apart from a short-term deposit placed about two and a half years ago and repaid at maturity. He described the issue as a gap between perception and reality, saying: "Sometimes perceptions are stronger than reality." These clarifications go to the heart of the reason he gave for resigning, linking his decision to persistent investor concerns about a possible conflict of interest. Based on the details available, the resignation disclosure offered no evidence of ongoing transactions between the bank and the company.
The bank reported net profit of 218.04 crore rupees in the quarter ended September 2026, compared with 24.14 crore rupees in the corresponding quarter of 2025, an annual increase of 803.41%. The bank described the result as its highest quarterly profit, putting the figure at 218 crore rupees. Vasudevan also said the bank’s total business exceeded 1 trillion rupees in the September quarter. The figures highlight the contrast between strong financial performance and the stock’s sharp negative reaction after the resignation announcement. The share-price move thus coincided with leadership and governance concerns, while the record operating results came in the same period.
The board asked Vasudevan to continue in his role until his successor takes over and tasked the Nomination and Remuneration Committee with preparing a list of internal and external candidates. The board chairman said the committee would draw up a shortlist, which the board would review before referring a candidate to the regulator for final approval. The appointment is subject to approvals from the Reserve Bank of India and the relevant regulators. The chairman estimated that the selection process and completion of approvals would take about three to four months. Vasudevan will therefore remain in the role during the search and transition until his successor takes over.
The resignation carries additional context from Vasudevan’s history with the bank: he founded Equitas as a microfinance institution in 2007 and led its transformation into a small finance bank in 2016. This is the second time he has announced that he would leave the managing director and chief executive role; he resigned in May 2022, then withdrew his decision in December of that year at the board’s request. The bank said at the time that it had halted the search for a successor after Vasudevan decided to stay. This time, the board has asked him to remain until his successor takes over, while the Nomination and Remuneration Committee has begun preparing a candidate list. The next step is to select a candidate and complete regulatory approvals within the timeline set by the board chairman.