Shares of Equitas Small Finance Bank rose nearly 9% on Wednesday (November 4) to a day's high of ₹57.25 on the NSE after the bank named Balaji Nuthalapadi as interim CEO, The Economic Times reported.
The board approved the appointment on the recommendation of its nomination and remuneration committee, subject to approval from the Reserve Bank of India (RBI), the bank said in an exchange filing. Mr Nuthalapadi is currently the bank's whole-time director. His appointment takes effect from the date of RBI approval, and the board will then decide, with P.N. Vasudevan, when Mr Vasudevan is relieved. The board has also begun looking for a permanent successor.
Why the CEO quit
Mr Vasudevan, the bank's founder, MD and CEO, announced on October 29, along with the second-quarter results, that he would step down. In his letter, he said his daughter is a co-promoter of an NBFC that received its RBI licence in 2023, which he said was within the rules.
He said investors had asked him about a perceived conflict of interest for three years, although there were no transactions between the bank and the NBFC apart from one short-term deposit about two and a half years ago, which was repaid. "Sometimes perceptions are stronger than reality," he wrote, adding that investors told him this "overhang" was making the stock underperform.
The share price
The shares fell 12% on October 29 to close at ₹57.17 and another 17% the next day to about ₹47.32, a fall of more than 27% in two sessions that wiped out over ₹2,000 crore of market value, The Economic Times reported. Even after Wednesday's rise, the stock was down about 12% this year.
Background
This is not the first time Mr Vasudevan has planned to leave. In May 2022 he said he wanted to step down to work in health and education, but changed his mind that December, and the RBI approved his reappointment for three years from July 23, 2023, Business Standard reported at the time.
This article is for information only and is not investment advice.