Sethu was born in Chendamangalam, a village in Ernakulam district, in the year 1942. He had his school education at Paliam High School, Chendamangalam, and took his bachelor's degree in physics from the Union Christian College, Aluva, at the age of 18.

Sethu began his professional career at a very young age taking him to various parts of the country. This phase of his life was instrumental in shaping his literary sensibilities and came to be reflected in many of his important works.

He worked in certain Central Government departments in North India before joining the Indian Meteorological Department in Bombay in 1962. In 1964 he took a transfer to Trivandrum and worked in the Meteorological Unit of the Thumba Equatorial Rocket Launching Station. Subsequently, he was promoted and posted to the newly established Institute of Tropical Meteorology in Pune. Then he worked in Railway Board, New Delhi for a couple of years before switching over to the banking industry in 1968. He joined the banking profession as a Probationary Officer in the State Bank Group. After holding many important positions in the Group, he took over as General Manager in the Corporation Bank and later as the Chairman of the South Indian Bank, a major private sector bank of the country. He served as the chairman and Chief Executive Officer of SIB from 1999 until his retirement in 2005. He was also on the board of the State Bank of Travancore for a period of three years after his retirement.

Widely travelled, he had attended many international conferences both on banking and literature in various countries.

Critics state that he used his South Indian Bank Chairman position to give expensive advertisement to newspapers regularly in return for free media coverage for him.

In 2012 September, he replaced eminent historian Bipan Chandra to become the chairman of National Book Trust, New Delhi.^[5] In 2015 March, the National Democratic Alliance government removed him from the post in a most ignominious manner, six months before his tenure was due to end.^[6] Sethu was replaced by Baldevbhai Sharma, former editor of the Rashtriya Swayamsevak Sangh mouthpiece Panchjanya.^[7]

He had written his first short story in the cramped attic of a Karol Bagh house in Delhi in the year 1967. He says, "It [the story] was about the severe droughts in Bihar; after a visit to the worst-hit areas and scenes of human suffering I wrote the story without knowing anything about the craft of writing and it was published in the Mathrubhumi magazine by its legendary editor and writer M. T. Vasudevan Nair.".^[8] His latest work, The Cuckoo's Nest, is the story of Madam Agatha, a former devout nun who, after renouncing the order, decides to take up the cudgels for the cause of tolerance and pluralism. She decides to set up a unique institution called 'Nest' for empowering the hapless girls from all over the country, discarded by society. The paramount condition set by her is that none of the resident girls are allowed to talk of their religion or caste inside the campus. The novelist attempts to portray the kind of challenges she has to face from vested interests all around while working towards secularism, and how she manages to swim against the tide.

Sethu, is one of the pioneers of modern Malayalam fiction who brought about a radical transformation of sensibility through his writings during the sixties and early seventies. In a literary career spanning over four and half decades, Sethu wrote over 18 novels and 20 collections of short stories. Many of his novels and stories have been translated into English and other Indian languages. His prominent works include Pandavapuram, Niyogam, Kaimudrakal, Vilayattam, Atayalangal, Kilimozhikalkkappuram, Marupiravi and Aliya (Novels), Petiswapnangal, Doothu, Chilakalangalil Chila Gayathrimar, Arundhathiyute Virunnukaran and Sethuvinte Kathakal (Short stories), and Sanidasa, Yathrakidayil (Essays).

Sethu has been honoured with many awards including the Kendra Sahitya Akademi Award, Kerala Sahitya Akademi Award for both novel and short story, Vayalar Award, Odakkuzhal Award and Muttathu Varkey Award. Four of his works have been made into films including the much acclaimed Pandavapuram, which was also made into Bengali titled Nirakar Chhaya. His latest work is Aliya (2013), one of the path-breaking novels in Malayalam.

His book in English, During the Journey and Other Stories published by LiFi Publications Pvt. Ltd., New Delhi  has been released during the New Delhi World Book Fair, 2014.

• During the Journey and Other Stories (in English)

• 1978: Kerala Sahitya Akademi Award for Story – Petiswapnangal
• 1982: Kerala Sahitya Akademi Award for Novel – Pandavapuram
• 1989: Viswadeepam Award – Niyogam
• 1994: Padmarajan Award – Uyarangalil
• 1999: Malayattoor Award – Kaimudrakal
• 1997: Kerala State Film Award for Best Story – Poothiruvathira Ravil (based on novel Njangal Adimakal)
• 2006: Vayalar Award – Atayalangal
• 2003: Muttathu Varkey Award – Pandavapuram
• 2006: Pravasi Kairali Sahitya Puraskaram
• 2007: Kendra Sahitya Akademi Award – Atayalangal
• 2009: Shortlisted for Crossword Book Award – The Wind from the Hills (English translation of the novel Niyogam)
• 2011: Bahrain Keraleeya Samajam Award
• 2012: Thrissur Souhrudavedi Award
• 2013: Odakkuzhal Award – Marupiravi
• 2020:Kerala Sahitya Akademi Fellowship^[9]
• 2020: Abu Dhabi Sakthi Award for Children's Literature – Appuvum Achuvum^[10]
• 2022:Ezhuthachan Puraskaram
• 2022:Mathrubhumi Literary Award^[11]

• Interview with Sethu on YouTube