Amid RBI assurance, Adani Group's value halves

Tribune News Service

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 over the unabated crash in stocks of Adani Group’s companies.

Western ratings mixed

• S&P Dow Jones to remove Adani Enterprises from its sustainability indices
• Moody’s fears Adani Group’s ability to raise capital can be hit
• Fitch Ratings did not see any downside to Adani stock rout

No loans against shares

• State Bank of India says its exposure to Adani Group is a fraction of its total lending
• SBI Chairman says the bank hasn’t given any loans against shares to Adani Group

Noisy scenes

• Oppn members stall Parliament proceedings for second straight day, raise slogans
• Members who trooped inside the well of the House will be ‘dealt with’, says RS Chairman Dhankhar

SENSEX ZOOMS 909.64 POINTS HEAVY BUYING IN BANKING STOCKS

CLOSES AT 60,841.88

• The NSE Nifty jumped 243.65 points to end at 17,854.05
• Titan, Bajaj Finance, HDFC Bank, HDFC, SBI, M&M were among the major winners

“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,” Sitharaman said, referring 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…. The financial markets are well-governed and in prime condition,” she said in a TV interview.

The Reserve Bank 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 was vigilant and continued to monitor the stability of the banking sector.

“The banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy,” it added.

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”.

The BSE and 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 the LIC and PNB, the State Bank of India (SBI) also said its exposure to the Adani Group was a fraction of its total lending. SBI Chairman Dinesh Khara said the bank had not given any loans against shares to the Adani Group and its total exposure was 0.88 per cent of the book or about Rs 27,000 crore. The bank’s non-fund exposure was 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, accusing 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