Adani crisis: Banking sector resilient and stable, says RBI 

Stocks of Adani Group firms have taken a massive beating on the bourses after US-based short-seller Hindenburg Research made a litany of allegations in a report.

Published: 03rd February 2023 10:03 PM  |   Last Updated: 03rd February 2023 10:03 PM   |  A+A-

Reserve Bank of India headquarters in Mumbai, RBI

Image used for representational purpose only. (File Photo | PTI)


MUMBAI: Amid concerns over banks' exposure to the crisis-ridden Adani Group, the Reserve Bank on Friday said India's banking sector is resilient and stable, and the central bank maintains constant vigil on the lenders.

Responding 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 constantly monitoring the banking sector.

However, the RBI did not name the Adani Group in the statement.

Stocks of Adani Group firms have taken a massive beating on the bourses after US-based short-seller Hindenburg Research made a litany of allegations in a report, including fraudulent transactions and share price manipulation at the Gautam Adani-led group.

The group has rejected the allegations.

Hindenburg released the report on January 24 -- the day on which Adani Enterprises' Rs 20,000-crore follow-on share sale opened for anchor investors.

In its statement, the RBI said as per the current assessment, "the banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy."

ALSO READ | Adani Group shares fall after 'stock manipulation, accounting fraud' claim

"As the regulator and supervisor, the RBI maintains a constant vigil on the banking sector and on individual banks with a view to maintain financial stability. The RBI has a Central Repository of Information on Large Credits (CRILC) database system where the banks report their exposure of Rs 5 crore and above which is used for monitoring purposes," the central bank added.

The RBI, the statement said, remains vigilant and continues to monitor the stability of the Indian banking sector.

It further said banks are also in compliance with the Large Exposure Framework (LEF) guidelines issued by the RBI.

The Reserve Bank of India (RBI) earlier this week sought details about lenders' exposure to the Adani Group.

On Wednesday, Swiss lender Credit Suisse stopped accepting bonds by Adani group companies as collateral for margin lending.

Three leading public sector banks have already disclosed their exposure to the Adani Group.

The country's largest lender State Bank of India (SBI) has an exposure of Rs 27,000 crore, while that of the second biggest Punjab National Bank (PNB) is at Rs 7,000 crore.

Another state-owned lender Bank of Baroda has total exposure of Rs 7,000 crore, which is also fully secured.

Government-owned life insurance behemoth Life Insurance Corporation (LIC) has disclosed holdings of Rs 36,474.78 crore in Adani group's debt and equity.

Earlier, the conglomerate withdrew the Rs 20,000-crore follow on public offer (FPO) of its flagship firm Adani Enterprises amid a steep fall in its stock prices.

Besides Credit Suisse Group AG, Citigroup Inc's wealth arm has also stopped accepting securities of Adani Group firms as collateral for margin loans as banks ramp up scrutiny of the conglomerate's finances.

The Opposition has been stalling Parliament for the past two days demanding a Joint Parliamentary Committee or a Supreme Court-monitored probe into the affairs of the group.

ALSO READ | Adani vs Hindenburg: The story of Asia's richest man and why is his company tanking

They alleged that the drastic fall in Adani Group shares on Indian exchanges has put public money in danger as public sector LIC and SBI have invested in those companies.

The Congress has alleged that the LIC and SBI have been "forced" to invest in the Adani Group.

Meanwhile, Moody's Investors Service on Friday said it is assessing the overall financial flexibility, including the liquidity position of Adani Group firms.

"These adverse developments are likely to reduce the group's ability to raise capital to fund committed capex or refinance maturing 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 bounced back on Friday after facing a heavy drubbing in the past 6 days.

The stock of Adani Enterprises rebounded 1.25 per cent to settle at Rs 1,584.20 apiece on the BSE. During the day, it tumbled 35 per cent to Rs 1,017.10 -- its one-year low.

Shares of Adani Ports also bounced back and climbed 7.98 per cent to Rs 498.85 after falling 14.51 per cent to Rs 394.95 -- its one-year low -- during the day.

Ambuja Cements rallied 6.03 per cent and ACC climbed 4.39 per cent.

However, shares of Adani Transmission tanked 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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