The Reserve Bank of India (RBI) on Friday said that the banking sector remains resilient and stable, allaying fears amid growing concern about the exposures of Indian banks to the Adani Group.
“As the regulator and supervisor, the RBI maintains a constant vigil on the banking sector and on individual banks with a view to maintain financial stability,” the central bank said in a release.
However, the RBI did not name the Adani Group.
The RBI has a Central Repository of Information on Large Credits (CRILC) database system where the banks report their exposure of Rs 5 crore and above which is used for monitoring purposes, it said.
“As per the RBI’s current assessment, the banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. Banks are also in compliance with the Large Exposure Framework (LEF) guidelines issued by the RBI,” it further added.
Media reports on Thursday said the central bank was already assessing the banking system’s exposure to the Adani Group which has lost $108 billion of market value since US short-seller Hindenburg Research’s allegations of misgovernance, ‘fraud’ and price ‘manipulation’ surfaced a week ago.
According to a recent CLSA report, Indian banks have an absolute debt exposure of close to Rs 80,000 crore, amounting to about 40% of the total Adani Group debt, which is nearly Rs 2 lakh crore.
Earlier in the day, India’s largest lender SBI said its total exposure to the conglomerate was 0.9% of its total loan book, or around Rs 27,000 crore.
Another public sector lender Bank of Baroda said it has reduced exposure to the embattled Adani Group entities over the last two years, and has no concerns on asset quality issues with the conglomerate.
The bank’s managing director and chief executive Sanjiv Chadha told reporters that the bank’s overall exposure to the ports-to-media conglomerate’s entities is one fourth of the single group exposures allowed under the Large Exposures Framework but refused to share a number.
Insurance behemoth Life Insurance Corporation has disclosed of having an exposure of Rs 36,474.78 crore to Adani group’s debt and equity, and added that the amount is less than one per cent of its total investments.
Adani Enterprises scrip closed 26.50 per cent down at Rs 1,564.70 a piece on the BSE on Thursday, as against gains of 0.38 per cent on the benchmark.