Chennai: Equitas Small Finance Bank lost roughly a third of its market value in two sessions, and the reason is a sentence in a resignation letter.
The stock fell about 15-16 per cent on Friday to around ₹47.91, after dropping 20 per cent on Thursday. The trigger was MD and CEO PN Vasudevan's resignation with immediate effect, disclosed in an exchange filing towards the close of trade on Thursday. He will continue to discharge his duties until a successor takes over.
In an interview with a business channel on Friday, Vasudevan said the decision was not sudden. 'This issue has been going on for 2-3 years, not an overnight issue,' he said. 'I have taken this call after considering many factors.'
The issue, as he described it, is a conflict of interest — or the perception of one — involving an NBFC co-promoted by his daughter that has received a licence from the Reserve Bank of India. 'There is no conflict of interest and it's just a perception,' he said. 'There is nothing we can do to remove this perception.'
He said he would not withdraw the resignation this time. He had proposed stepping down in 2022 before deciding to stay on. The board has asked its Nomination and Remuneration Committee to start the process of choosing a successor, from within and outside, and Vasudevan said a leadership transition should happen in the next four to six months.
He also said he had been diluting his stake in the bank from the beginning and does not hold much of it now.
The market's reaction is less about the individual than about what a CEO exit costs a lender. Small finance banks are valued on the predictability of their loan book and their cost of funds; both are read through management continuity. A 30 per cent drawdown in two days is the market repricing that continuity.
The bank has not announced a date for the transition. Until the committee names a successor, the question investors will ask is not who runs Equitas next year, but who signs off on its numbers next quarter.