RBI asks banks about exposure to Adani group firms

Tribune News Service

New Delhi, February 2

The Reserve Bank of India (RBI) has sought details about banks’ exposures to the Adani Group and the National Stock Exchange put three of its companies shares under the additional surveillance mechanism (ASM) even as its meltdown began having international repercussions.

The Group, meanwhile, also pushed back at alarmist news reports and its owner Gautam Adani in a media message said the decision to withdraw the fully subscribed FPO of the flagship firm of his group was primarily because of volatility in the market. The fundamentals of the company are strong, he asserted.

Lord Jo Johnson, younger brother of former British PM Boris Johnson, quit his non-executive directorship of a UK-based investment firm linked with the Adani Group’s now-withdrawn Rs 20,000 crore Follow-on Public Offer (FPO). Johnson junior had taken the position in June last year and said he sat on the board after having been assured that the company “is compliant with its legal obligations and in good standing with regulatory bodies”.

Bangladesh has sought a revision of a 2017 power purchase agreement with Adani Power after local media said the price was high and the issue has been earlier raised by Bangladesh Prime Minister Sheikh Haisna. The Bangladesh power company is seeking a 40 per cent downward revision in the price.

When asked about Dhaka’s issue with Adani Power, MEA spokesperson Arindam Bagchi said it is a deal between a sovereign government and an Indian company, “I do not think we are involved in this.”

Bagchi did not think this will impact bilateral ties. We would like to see greater economic interconnections, integration of projects, investments but if a certain project is not working for financial or economic reasons, I don’t think that’s a reflection on the relationship,” he said.

Adani Group stocks have lost over $ 100 billion in value since a US-based short seller Hindenburg made allegations of stock manipulation and accounting fraud. The Group has said the accusations were a “malicious combination of selective misinformation and stale, baseless and discredited allegations”.

The RBI is seeking details both from private and public banks about their exposure estimated at Rs 75,000 crore in Adani group companies. It has also sought to know special arrangements extended to the companies such as collaterals in the form of bonds. The NSE’s ASM indicates that the company’s shares are in trouble and require special monitoring.

The world’s second-largest sovereign fund, Norges Bank Investment Management, has decided to cut its exposure to Adani Group from $80 million to $200 million due to a drop in share prices, according to a leading media house.

But Gautam Adani’s video message and its withdrawal of the FPO on moral grounds has done nothing to the loss of confidence among mega overseas funds. A day after Credit Suisse stopped having zero lending value to bonds of the Adani group, Norges Bank Investment Management from Norway followed suit. Citigroup also stopped extending margin loans against securities of Adani group.