Equitas SFB names Balaji Nuthalapadi as interim CEO

Equitas Small Finance Bank has appointed executive director Balaji Nuthalapadi as its interim chief executive officer (CEO), subject to Reserve Bank of India (RBI) approval, following the resignation of founder and managing director (MD) P.N. Vasudevan last week.

The board has cleared Nuthalapadi’s appointment on 3 November following a recommendation from its nomination and remuneration committee (N&RC). He will be the lender’s boss as the board conducts its search for a permanent CEO.

Nuthalapadi has nearly 30 years’ experience at Citi, having held a number of senior roles prior to joining Equitas. He’s been at the forefront of the bank’s technology and operations upgrades and is therefore a natural fit to lead the transition. The board has said it will consider both internal and external candidates for the CEO role.

The change in leadership follows Vasudevan’s resignation amid investor concerns about his daughter’s NBFC. In his resignation letter, he states that the relationship had been fully disclosed to both the board and RBI and that there had been no dealings between the two entities other than a very short-term deposit which was repaid many years ago.

Vasudevan said some investors felt the issue had become an overhang on the share price and was negatively impacting shareholder value. On the earnings call the same day, he said there had been no nudge from the regulator for his decision.

The transition is happening at a time when Equitas is actually posting very good results. The bank reported a record quarterly profit of ₹218 crore and has crossed the ₹1 trillion mark in business. They’re also in the midst of a five-year growth plan which is very much focused on 20%-plus annual growth in both loans and deposits, along with improving profitability.

Investors, however, kept raising the issue in meetings over the course of three years. “I am told by investors that this ‘overhang’ is causing the stock to underperform, impacting value creation for both shareholders and employees,” Vasudevan wrote in the letter.

Asked what he would tell senior management about the transition, Vasudevan said, “Individuals come and go, institutions have to last forever,” pointing out that he had a little over two years left in his tenure and would have had to leave at some point anyway.

The bank’s shares nonetheless fell sharply in the two trading sessions after the resignation was announced. In his letter, Vasudevan said unsecured microfinance loans now account for about 10% of the bank’s advances, and that the lender has a five-year plan through March 2031 targeting annual growth in advances and deposits of over 20%, along with an average return on assets of 1.5%.

Vasudevan has said he will continue as MD and CEO until his successor takes charge, after which he plans to focus on building a corpus for his trust.

Get Latest real-time updates

Catch all the Business News , Corporate news , Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.

✕

Wait for it…

Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.