‘Banks stable’: RBI amid concerns of exposure to Adani rout

Several media reports claimed concerns about India's largest lender SBI, along with the Life Insurance Corporation (LIC) of India, being at the risk of overexposure amid the ongoing stock rout of Gautam Adani's companies.

Amid heightened uncertainties regarding Adani Group in the aftermath of a jarring Hindenburg report, the Reserve Bank of India on Thursday dismissed concerns about the “exposure” of Indian banks to the Gautam Adani-led conglomerate and said that the banking sector was “resilient and stable”.

The RBI, on August 10 cancelled the Pune-based bank’s licence as the lender did not have adequate capital and earning prospects. (REPRESENTATIVE PHOTO)

“There've been media reports expressing concern about exposures of Indian banks to a business conglomerate. As the regulator and supervisor, RBI maintains a constant vigil on the banking sector and on individual banks to maintain financial stability,” the banking regulator said in its latest statement.

“The RBI has a Central Repository of Information on Large Credits (CRILC) database system where the banks report their exposure of ₹5 crore and above which is used for monitoring purposes. As per the RBI’s current assessment, the banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. Banks are also in compliance with the Large Exposure Framework (LEF) guidelines issued by the RBI,” RBI said.

Several media reports claimed concerns about India's largest lender, the State Bank of India (SBI), along with the Life Insurance Corporation (LIC) of India, being at the risk of overexposure amid the ongoing stock rout of Gautam Adani's companies. However, both companies have given elaborate statements dismissing reports suggesting concern about their exposure to the Adani Group.

Earlier today, the SBI dismissed concerns of its exposure to the embattled conglomerate and said that any future financing to Adani's projects would be evaluated “on its own merit”. SBI chairman Dinesh Khara said that there was no challenge or cause of concern for them in light of the stock rout. “SBI has an overall exposure of ₹27,000 crore in Adani group which is 0.88% of the loan book as on 31st December 2022. The loans are against assets and businesses that are cash-generating. So, we don’t see any challenge, no cause of concern for us,” Khara said.

On further lending to the group, Khare stated, “It is a discussion which is vested with the credit committees and also the sanctioning authority. So, everybody will be very mindful about what the situations are.” The LIC also made a similar statement denying such concerns.

Finance minister Nirmala Sitharaman, citing the SBI and LIC statements during an interview with News18, reiterated that their exposure to Adani Group's stocks was very well within the permitted limits and that they were still over profit even with the valuation falling.

Meanwhile, the Bank of Baroda clarified that its overall exposure to Adani Group was at one-fourth of the ceiling set under a large exposure framework. “The exposure has come down over the past 3 years. 30% of exposure is either secured by a guarantee from a PSU or is to a joint venture with a PSU,” the bank stated.

Adani Group – led by billionaire Gautam Adani, who became Asia's richest man, and briefly, the third-richest in the world – is now reeling from a US short-seller's scathing report that has cratered its shares, prompted calls from opposition lawmakers for a wider probe and the central bank to check on banks' exposure to the conglomerate.