Mumbai, Oct. 30 -- Shares of Equitas Small Finance Bank crashed 20% on Thursday, after managing director and chief executive officer PN Vasudevan resigned citing "overhang" of potential conflict of interest from his daughter promoting a non-bank entity. In a letter to the bank's chairman and board of directors, Vasudevan, who founded Equitas as a microfinance institution in 2007, conveyed his intention to step down to pursue certain "personal and social initiatives". He said his daughter is the co-promoter of an NBFC which received its licence from RBI in 2023, which was disclosed to the bank's board and the Reserve Bank of India. Vasudevan's daughter, Varshini Vasudevan Pathangi, founded Unico Housing Finance in 2023. Despite him being the MD of a bank and his daughter being the co-promoter of an NBFC being within the regulatory framework of the Banking Regulations Act, Vasudevan said he has repeatedly asked about the perceived conflict of interest in investor meetings over the past three years. In reality, there is no conflict of interest, since there is no transaction at all between the bank and the NBFC, except one short-term deposit about 2.5 years back, which was duly repaid on maturity. "There are no other transactions, including any loans by the bank to the NBFC," Vasudevan said, adding that in spite of him explaining this to investors, the perception of conflict continues to persist. "I am told by investors that this 'overhang' is causing the stock to underperform, impacting value creation for both shareholders and employees. Sometimes, perceptions are stronger than reality. Under the circumstance, it is important that we remove the 'overhang' arising out of the perception issue. Accordingly, I would like to step down from the bank," Vasudevan said in his letter, adding that with this 'overhang' removed, the stock should reflect the financial strength of the bank, benefiting all stakeholders including employees. The board "took note of" and accepted the resignation, while requesting Vasudevan to continue to discharge the responsibilities of MD & CEO till his successor is in place, the bank notified the exchanges, The board also asked the nomination and remuneration committee to identify and recommend suitable candidates, both internal and external. "Mr. P. N. Vasudevan has confirmed that he will continue to function as MD & CEO till his successor takes over from him. The board will ensure that the bank continues to pursue its long-term vision set out earlier, and does not expect this transition to have any impact on the same," the notification said. With the exchanges being notified post 1500 IST, shares of the bank crashed over 20% intraday to hit the lower circuit of Rs.52.11 toward the close of the trading session. The stock pared some losses to end 12.2% lower at Rs.57.17 on the NSE....