Delhi HC Upholds BharatPe’s Veto Rights In Unity SFB Shareholding Dispute

Adding another layer to the ongoing shareholder dispute at BharatPe-backed Unity Small Finance Bank (SFB), the Delhi High Court (HC) has rejected an appeal filed by the bank against an interim order.

The interim order restrains Unity SFB from placing a proposed capital restructuring resolution before its board without prior written consent from BharatPe parent Resilient Innovations (RIPL) and Centrum Financial Services.

The order, passed by a bench Justices C Hari Shankar and Vinod Kumar on November 5, restrains  Unity SFB from tabling, discussing or approving ‘Agenda Item 18’ at its board meeting without prior written consent from RIPL and Centrum Financial Services. The HC granted BharatPe the interim relief pertaining to the case earlier this year in July

The dispute stems from a Shareholders’ Agreement (SHA) signed between Unity Bank, RIPL and Centrum in October 2021, following their partnership to establish Unity SFB. 

The agreement features certain ‘Reserved Matters’ that would require prior written consent from representatives of both RIPL and Centrum. These include changes to the bank’s capital structure and amendments to its constitutional documents.

Agenda Item 18 proposed increasing Unity SFB’s authorised share capital from ₹4,000 Cr to ₹4,900 Cr by creating an additional 90 Cr preference shares of ₹10 each. The proposal also involved amending the bank’s Memorandum of Association (MoA) to facilitate the issuance of these shares.

RIPL opposed the proposal, arguing that the proposed capital restructuring could dilute its shareholding in Unity SFB from 49% to 21%. It contended that the resolution fell under the SHA’s Reserved Matters and therefore required prior written consent from both RIPL and Centrum.

Welcoming the decision, BharatPe said the ruling reaffirmed the shareholder rights and governance framework agreed upon when the joint venture was established in 2021.

“The board must ensure that the bank complies with the court’s directions in letter and spirit. We expect the board to exercise independent judgment, free from undue influence, and act in the interests of the bank and all its stakeholders, including minority shareholders,” a BharatPe spokesperson said.

The company also called on Unity’s board to respect the governance processes agreed upon at the time of the bank’s inception and honour its contractual obligations under the SHA. It said the agreed framework should not be set aside to favour one shareholder group over another.

Unity Small Bank, on the other hand, declined to comment on the matter.

“The discussions are solely between the bank’s promoter and a financial investor. The bank remains operationally unaffected, and continues to serve its customers and stakeholders as usual,” the bank told Inc42.

The proposal also involved amending Clause V of the bank’s Memorandum of Association (MOA) to reflect the revised authorised capital.

While the bank acknowledged in its board agenda that the proposed capital increase was a ‘Reserved Matter’ under the SHA and sought RIPL and Centrum’s approval, it also proposed taking the resolution up for board discussion and approval.

RIPL opposed the move, arguing that a clause of the SHA expressly prohibits even discussing a Reserved Matter at a board meeting without prior written consent from both shareholders. It also relied on Clause 8, which bars the bank from taking decisions or actions on Reserved Matters without the requisite consent.

On the financial front, Unity SFB has seen significant growth since commencing operations in November 2021. In Q4 FY25, its operating revenue surged 123% YoY to ₹977 Cr, while net profit increased 83% to ₹264 Cr. For the full FY25, the bank reported revenue of ₹2,837 Cr and net profit of ₹482 Cr.

Notably, the financial results for FY26 are yet to be disclosed. On the other hand, BharatPe’s FY26 operating revenue increased by 11% YoY to ₹1,862 Cr, adjusted EBITDA profit rose 20% to ₹146 Cr as per a report by ANI. The company is yet to file its annual report for the fiscal.

Meanwhile, BharatPe’s parent RIPL, which holds a 49% stake in Unity SFB, was reportedly exploring a stake sale in January 2025. The company was looking to offload up to 25% of its stake in the bank to raise around $800 Mn.

The proposed sale was also linked to regulatory requirements mandating BharatPe to bring down its shareholding in the bank to 10% within eight years of its commencement of operations, by 2029. The company is yet to pare its stake. 

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