RBI asks banks for details of exposure to Adani Group

Tribune News Service

New Delhi, February 2

As the Reserve Bank of India (RBI) on Thursday sought details about lenders’ exposures to the Adani Group, chairman Gautam Adani cited market volatility for the decision to withdraw the follow-on public offer (FPO) of its flagship firm Adani Enterprises. His companies continued to lose on the stock market with the cumulative rout nearing USD 108 billion in a week — one of the biggest wipeouts in India’s history.

The RBI is seeking details both from private and public banks with the total exposure to the group estimated at Rs 75,000 crore. It has also sought to know special arrangements extended to the companies such as collaterals in the form of bonds.

Under NSE scanner

• NSE puts stocks of 3 group cos under additional surveillance
• Rout continues, flagship co’s scrip closes 26.5% down at Rs 1,564.70

Allaying concerns

SBI: Exposure to the group fully secured by cash generating assets

Bank of Baroda: Total exposure stands at Rs 7,000 crore, fully secured

LIC: Rs 36K crore in group’s debt, equity, less than 1% of total investment

The National Stock Exchange (NSE) too has put shares of three group companies under the additional surveillance mechanism (ASM). The move indicates the company’s shares are in trouble and require special monitoring. In a media message, Adani claimed the fundamentals of the company were strong.

Won’t let investors down

For me, the interest of my investors is paramount and everything is secondary. To insulate the investors from potential losses, we have withdrawn the FPO. Once the market stabilises, we will review our capital market strategy.

A day after Swiss lender Credit Suisse stopped accepting bonds by Adani Group companies as collaterals for margin lending, Norges Bank Investment Management from Norway followed suit. Citigroup also stopped extending margin loans against securities of the group. Meanwhile, 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PM Boris Johnson, quit his non-executive directorship of a UK-based investment firm linked with the Adani Group’s now-withdrawn FPO.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 too has sought a revision of a 2017 power purchase agreement with Adani Power after local media said the price was high and the issue had been earlier raised by PM Sheikh Hasina. 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 was 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.