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Equitas Small Finance Bank shares spent Thursday playing tug of war. On one side were the bank’s best-ever quarterly profits. On the other was the sudden resignation of the man who built the bank.
The second update eventually won. After initially rising following the Q2 results, Equitas shares plunged around 25% from the day’s high.
First, the good news: the company reported a record net profit of ₹218 crore for the September quarter, compared with only around ₹24 crore last year.
Its loan book grew nearly 30% to ₹50,694 crore, while deposits increased 19% to ₹52,483 crore.
The bank’s bad-loan situation also improved.
- Gross non-performing assets or loans on which customers have stopped making payments fell to 2.29%
- Net bad loans declined to 0.70%.
Naturally, investors liked the numbers and initially pushed the stock higher.
Then came the resignation: P.N. Vasudevan, Equitas’ founder, managing director and CEO, announced that he would step down.
The timing raised more questions: Vasudevan had been reappointed for another three-year term only in July 2026. He was expected to remain CEO until July 2029.
His resignation letter said he wanted to pursue personal and social initiatives. But it also mentioned concerns surrounding his daughter’s role as a co-promoter of Unico Housing Finance, a separate non-banking financial company.
The Reserve Bank of India had reportedly sought information about the relationship between Equitas and Unico. The bank previously said Vasudevan had disclosed his daughter’s investment and maintained that he complied with the relevant banking rules. No wrongdoing has been established.
Why does that connection matter: both a bank and an NBFC lend money. Therefore, regulators and investors want to know whether any family connection could create a conflict of interest or lead to business being passed between the two companies.
His exit, he suggested, could remove that concern.
There is some history here: Vasudevan had also offered to resign in 2022 to focus on social work. He later withdrew that decision after the bank struggled to complete the leadership transition.
That history may explain why investors reacted sharply this time. Finding a suitable successor for a bank is already complicated because the appointment requires RBI approval. Replacing its founder-CEO makes the process even more important.
