Since US-based short-seller Hindenburg issued a report on Indian conglomerate Adani Group, investors and depositors have been on edge. The study cites concerns about the firm being overleveraged and alleges inappropriate use of offshore tax havens and stock manipulation.
Since then, the opposition has addressed these issues in Parliament and called for a JPC investigation into the claims.
Clarifications on their exposure to the Adani Group have been provided by banks and the Life Insurance Corporation of India (LIC).
The massive, state-owned Life Insurance Corporation (LIC) has reported interests in the debt and equity of the Adani group totaling Rs 36,474.78 crore.
SBI’s entire exposure to the group was 0.9% of its total loan book, or around Rs 27,000 cr. According to Fitch Group’s CreditSights, the country’s largest lender has a provision reserves buffer of approximately 338 billion rupees ($4.08 billion), or approximately 1% of net loans.
It further stated that SBI has the ability to create pre-provisioning operating profit, or income before deducting potential bad debt provisions.
According to the bank’s managing director, the lender’s outstanding exposure to the group was less than one-fourth of the amount permitted by the central bank for conglomerates, which allows a bank to expose no more than 25% of its available eligible capital base to any one group of connected companies.
A major portion of this went to enterprises with “extremely solid” cash flows, limiting any risk to asset quality, according to Sanjiv Chadha, MD of India second largest Bank Bank of Baroda
AXIS Bank: Its entire exposure to the Adani group is 0.94% of net advances. According to the company, Adani Group’s exposure is mostly to operational companies in sectors like as ports, transmission, power, gas distribution, highways, and airports.
According to the report, fund-based outstanding is 0.29 percent of net advances, while non-fund-based outstanding is 0.58 percent.
Punjab National Bank exposed to Adani Group firms to the tune of Rs 7,000 crore. The airport industry, which is housed in the flagship organization Adani Enterprises, accounts for Rs 2,500 crore of this.
Previously, the conglomerate withdrew its flagship firm Adani Enterprises’ Rs 20,000-crore follow-on public offer (FPO) due to a sharp drop in its stock prices.
In addition to Credit Suisse Group AG, Citigroup Inc’s wealth arm has stopped taking Adani Group stocks as collateral for margin loans, as banks increase their scrutiny of the conglomerate’s finances.
For the previous two days, the opposition has been stalling Parliament by requesting a Joint Parliamentary Committee or a Supreme Court-monitored investigation of the group’s activities. They said that the sharp drop in Adani Group shares on Indian markets has jeopardised public funds, as public sector LIC and SBI had invested in those companies.
According to the Congress, the LIC and SBI were “forced” to invest in the Adani Group.
