The Delhi High Court has blocked Unity Small Finance Bank’s plan to increase authorized capital from ₹4,000 crore to ₹4,900 crore. The court ruled that the bank must obtain written consent from major shareholders, including BharatPe’s parent, Resilient Innovations, as per a 2021 agreement. This ruling prevents the potential dilution of stake for existing investors.
The Delhi High Court has effectively halted Unity Small Finance Bank’s proposal to expand its authorized share capital, citing the bank’s failure to adhere to governance commitments made to its key investors. On November 5, 2026, a division bench dismissed the bank's appeal, maintaining an interim restriction that bars the board from proceeding with the capital hike without written consent from its major shareholders.
The bank had proposed increasing its authorized capital from ₹4,000 crore to ₹4,900 crore. This move was intended to facilitate the conversion of warrants into compulsorily convertible preference shares. However, legal filings indicate that this corporate action would have significantly altered the current shareholding structure, potentially diluting the stake held by Resilient Innovations, the parent company of BharatPe, from 49 percent to 21 percent.
During the proceedings, the bank attempted to justify its actions by arguing that the requirement for shareholder approval was an inadvertent oversight and that the Reserve Bank of India’s regulatory directions necessitated changes to its governance articles. The division bench, comprising Justices C. Hari Shankar and Vinod Kumar, rejected this defense, describing it as an argument of desperation. The court clarified that the shareholders’ agreement signed on October 26, 2021, remains legally binding. Under this agreement, any decision categorized as a Reserved Matter requires joint approval from both major stakeholders, Resilient Innovations and Centrum Financial Services.
The court emphasized that the contractual obligations in the shareholders' agreement take precedence over the bank's articles of association. This ruling reinforces the importance of governance frameworks in joint venture entities, particularly in the banking sector where regulatory compliance and shareholder consensus are critical.
This decision creates a significant governance impasse for the bank. For investors and stakeholders, the core risk lies in the prolonged friction between the bank’s major promoters, which may impact strategic decision-making and operational stability. If the dispute remains unresolved, the bank may face difficulties in executing future capital-raising plans necessary for expansion or meeting regulatory capital requirements. While the court noted that this order does not prevent the bank from complying with broader RBI mandates, the immediate path forward remains complex. The dispute is currently pending before a single judge, and the bank must now navigate the requirement for joint consensus on major corporate decisions to avoid further legal challenges.