Banking system resilient, assure Sitharaman and RBI amid Adani stock rout

Tribune News Service

Sandeep Dikshit

New Delhi, February 3

Union Finance Minister Nirmala Sitharaman and the Reserve Bank of India have assured that the country’s stock markets and the banking system were well regulated and resilient following concerns in the wake of the unabated crash in stocks of Adani Group’s companies.

Siharaman said, “one instance, however, much talked about globally, I would think is not going to be indicative of how well Indian financial markets have been governed’’ and referred to statements by government financial institutions about their limited exposure to the Adani Group. “I think the investor confidence which existed before shall continue even now,’’ she said in a TV interview.

Meanwhile, the Reserve Bank of India issued a statement assuring that banks were in compliance with the Large Exposure Framework guidelines and their critical parameters like asset quality and provision coverage remain. The RBI said it remains vigilant and continues to monitor the stability of the banking sector.

On the other hand, Western analysts were mixed in their assessment, with Moody's stating the present circumstances could hurt the Adani Group’s ability to raise capital and S&P Dow Jones Indices removing its flagship Adani Enterprises from its sustainability indices “following a media and stakeholder analysis triggered by allegations of stock manipulation and accounting fraud,’’ it said in a statement.

The BSE and the NSE have already put Adani Enterprises, Adani Ports and Ambuja Cements under their short-term additional surveillance measure (ASM).

Fitch Ratings, however, did not see any downside in the crash that has cut the Adani Group’s market value by half to $120 billion. It also did not foresee any material changes to its cash flow and noted that there are “no near-term significant offshore bond maturities’’.

After LIC and PNB, State Bank of India (SBI) also said its exposure to the Group was a fraction of its total lending. SBI Chairman Dinesh Khara said the bank has not given any loans against shares to the Adani Group and its total exposure is 0.88 per cent of the book or about Rs 27,000 crore. The bank’s non-fund exposure is only of letters of credit and performance bank guarantees, he stated.

The combined market cap of Adani Group's listed companies has halved to $120 billion after a US short-seller Hindenburg Research released a report last week alleging the conglomerate of accounting and stock market fraud which, it said was “the largest con in corporate history’’.

The Adani Group has said the report was a “malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts’’.

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#gautam adani #nirmala sitharaman #Reserve Bank of India RBI