MUMBAI: Indian banks don’t face any material risk due to their exposure to Adani Group debt, said CLSA and Jefferies on Friday. The share of banks’ funding in Adani Group’s overall debt mix is showing a declining trend, said the global brokerage firms.
“The ballpark exposure of private banks is 0.3 percent of FY24 loans and 1.5 percent of FY24 net-worth. For PSU banks, the exposure is 0.7 percent of FY24 loans and 6 percent of FY24 net-worth,” said CLSA in a report.
CLSA estimates banking exposure to the Group is 0.55% of system loans as bank debt stands at less than 40% of total Group borrowing. Within this, PSU banks’ exposure as a share of their loans is 0.7%, with the figures for some banks potentially at more than 1% of loans, while for private banks the exposure is 0.3% of loans.
“While we watch for developments here, we don’t see material risk arising to the Indian banking sector,” brokerage firm Jefferies said in a note. The share of bank debt in overall Group debt has reduced materially and we estimate incrementally banks have only lent Rs 150 billion (Rs 15,000 cr) or 15% of the Rs 1 trillion the Group companies have borrowed over the past three years. As per the brokerage, the Group’s debt accounts for 0.5% of total loans across the Indian banking sector.
Meanwhile, India's biggest public sector bank SBI had this clarification to share on the Hindenburg report.
"Indian banks have an exposure of around Rs 80,000 crore to the Adani Group, which is 38 per cent of the group's total debt.
"While as a matter of policy, we don't comment on individual clients, in the interest of setting the context right, we wish to clarify that SBI's exposure to Adani Group is well below the Large Exposure Framework. All exposure to the group from SBI is secured by cash generating assets with adequate TRA/Escrow mechanism in place, hence debt service will not be a challenge," said Swaminathan J, MD of corporate banking and subsidiaries at SBI, in a statement.