The Reserve Bank of India has questioned Equitas Small Finance Bank about its connection to Unico Housing Finance, amid concerns over related-party transactions and disclosure practices involving the bank’s CEO’s daughter.
The Reserve Bank of India has asked Equitas Small Finance Bank’s board and senior executives for details about the lender’s links to Unico Housing Finance, according to reports by Moneycontrol and other Indian media. The regulator is said to have wanted to know whether directors were aware that Unico was founded by Varshini Vasudevan Pathangi, the daughter of Equitas chief executive PN Vasudevan, and whether any related-party transactions existed between the two firms.
Equitas said Vasudevan had disclosed his daughter’s investment in Unico to the board and to the RBI during the process that led to his reappointment. The bank also said that such matters would be reported to stock exchanges if disclosure was required under applicable rules, while stressing that its correspondence with the regulator remained confidential.
The questions come as the RBI’s supervision of Equitas has shifted to a new Special Supervisory Manager, who took over in June, according to people familiar with the matter. One senior official told the publication that a new supervisor would normally be briefed on significant issues affecting a regulated entity. Banking rules also limit an managing director and chief executive from being an owner of a non-bank lender or closely linked to one’s promoter.
Vasudevan is in his tenth year leading Equitas. He first said in May 2022 that he would leave to focus on charitable work, then reversed that decision in December that year. He was later reappointed for a three-year term from July 23, 2023, and the RBI has now approved another term starting July 23, 2026. Unico, meanwhile, was incorporated in March 2023 in Chennai, and has since drawn outside capital, including fresh investment from Anicut Capital on August 13, according to the company’s latest reporting.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
