Amid concerns over banks’ exposure to the crisis-hit Adani group, the Reserve Bank on Friday said India’s banking sector is resilient and stable, and the central bank continues to monitor lenders.
In response to media reports expressing concern about the exposure of Indian banks to a “business conglomerate”, the Reserve Bank said in a statement that it is continuously monitoring the banking sector.
However, the RBI did not name the Adani group in the statement.
Shares of Adani group firms have taken massive losses after a report by US-based short-seller Hindenburg Research made multiple allegations including fraudulent transactions and share price manipulation in the Gautam Adani-led group.
The group has denied the allegations.
Hindenburg released the report on January 24 – the day Adani Enterprises’ Rs 20,000-crore follow-on share sale opened to anchor investors.
In its statement, RBI said as per the current assessment, “The banking sector remains resilient and stable. Various parameters related to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. RBI has a central repository of information on large credits (CRILC) database system where banks report their exposure of Rs 5 crore and above, which is used for monitoring purposes,” the central bank said.
The RBI remains vigilant and continues to monitor the stability of the Indian banking sector, the statement said.
It further said that the banks are also in compliance with the Large Exposures Framework (LEF) guidelines issued by RBI.
Reserve Bank of India The Reserve Bank of India (RBI) had earlier this week sought details about the exposure of Adani Group’s lenders. On Wednesday, Swiss lender Credit Suisse stopped accepting bonds as collateral for margin lending by Adani group companies.
Three major public sector banks have already disclosed their exposure to the Adani group. The country’s largest lender State Bank of India (SBI) has a loan of Rs 27,000 crore, while the second largest Punjab National Bank (PNB) has Rs 7,000 crore.
Another state-owned Bank of Baroda has a total exposure of Rs 7,000 crore, which is also fully secured.
State-owned life insurance company Life Insurance Corporation (LIC) has disclosed its holding of Rs 36,474.78 crore in debt and equity of Adani Group.
Earlier, the group had withdrawn the Rs 20,000-crore follow on public offer (FPO) of its flagship firm Adani Enterprises amid a sharp fall in share prices.
Apart from Credit Suisse Group AG, the wealth arm of Citigroup Inc has also stopped accepting securities of Adani Group firms as collateral for margin loans as banks intensified scrutiny of the group’s finances.
The opposition has been stalling Parliament for the past two days demanding a probe into the group’s affairs under the supervision of a joint parliamentary committee or the Supreme Court. He alleged that the sharp fall in Adani Group’s shares on Indian exchanges has put public money at risk as public sector banks LIC and SBI have invested in those companies.
The Congress has alleged that LIC and SBI have been “coerced” into investing in the Adani group.
Meanwhile, Moody’s Investors Service on Friday said it is assessing the overall financial resilience, including the liquidity position, of Adani group firms.
“These adverse events are likely to reduce the group’s ability to raise capital to meet committed capex or refinance refinanced debt over the next 1-2 years,” Moody’s said.
However, another rating firm Fitch Ratings said there is no immediate impact on the ratings of Adani entities and their securities.
Shares of four Adani group firms, including Adani Enterprises and Adani Ports, rallied on Friday after facing heavy losses in the last 6 days.
Shares of Adani Enterprises closed at Rs 1,584.20, up 1.25 per cent, on the BSE. During the day, it fell 35 per cent to Rs 1,017.10 – its one-year low.
Shares of Adani Ports also jumped and climbed 7.98 per cent to Rs 498.85 after falling 14.51 per cent to Rs 394.95 during the day.
Ambuja Cements gained 6.03 per cent and ACC gained 4.39 per cent.
However, shares of Adani Transmission declined 10 per cent, Adani Green Energy (10 per cent), Adani Power (5 per cent), Adani Total Gas (5 per cent), Adani Wilmar (4.99 per cent), NDTV (4.98 per cent). ,
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)