Adani Group mess: What Centre, RBI, SBI, LIC and Bank of Baroda said on 'Crisis'

The Adani Group's decision to withdraw its FPO has sparked a political debate in India. A report by US-based short-seller firm Hindenburg which the Adani Group has called 'rife with conflict of interest', led to a fluctuation in the markets eventually making Adani Group withdraw its FPO even after it was fully subscribed. Adani Group's decision to withdraw its FPO and the consequent impact on the market prompted several major institutional stakeholders to come out with clarifications on the Adani Group row and its impact on the market. 

Indian financial system is robust: Finance Secretary

Finance Secretary TV Somanathan said the stock market turmoil caused by the rout in Adani Group shares is only a 'storm in a teacup' from a macroeconomic point of view. Somanathan further said India's public financial institutions are robust and there is absolutely no concern from the point of view of financial stability, either for depositors or for policyholders, or for anyone holding shares in these institutions, adding that the share of any one company is not such as to create any impact at the macro level and so there is absolutely no concern from that point of view. 

Banking sector remains resilient: Reserve Bank of India 

The Reserve Bank of India (RBI) has said that as per present assessment, the banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. It is being stated that the RBI maintains a constant vigil on the banking sector and on individual banks to maintain financial stability, reported news agency ANI.

"There've been media reports expressing concern about exposures of Indian banks to a business conglomerate. As the regulator&supervisor, RBI maintains a constant vigil on banking sector & on individual banks to maintain financial stability. RBI has a Central Repository of Information on Large Credits (CRILC) database system where the banks report their exposure of Rs 5 cr & above which is used for monitoring purposes. As per current assessment, banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. Banks also in compliance with Large Exposure Framework guidelines."

"As per current assessment, banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. Banks also in compliance with Large Exposure Framework guidelines": RBI

— ANI (@ANI)

Exposure one-fourth of ceiling: Bank of Baroda 

The Bank of Baroda has told the agency that the overall exposure of the bank to the Adani Group is at one-fourth of the ceiling set under a large exposure framework and that the exposure has come down over the past three years.  

Further, the bank said its exposure has come down over the last three years. About 30% of the total exposure is either secured by a guarantee from a Public Sector Understaking (PSU) or is to a joint venture with a PSU, stated Bank of Baroda.

The overall exposure to Adani Group is at one-fourth of the ceiling set under a large exposure framework. The exposure has come down over the past 3 years. 30% of exposure is either secured by a guarantee from a PSU or is to a joint venture with a PSU: Bank of Baroda

— ANI (@ANI)

Bank does not envisage any challenge: SBI 

SBI chairman Dinesh Kumar Khara said the public sector bank does not envisage any challenge due to the turmoil in Adani Group stocks. The SBI chairman said the bank's overall exposure is 0.88% of overall loan book as on December 31st, 2022. He said  the bank does not envisage the embattled ports-to-mining group to face any challenge to service its debt obligations, adding that SBI has not given any loans against shares to the group.

Talking to ANI, the SBI chief said, "An overall exposure of the bank is Rs 27,000 cr in the Adani group, which is 0.88% of the loan book as on December 31st, 2022. Moreover, the loans are against various entities assets and businesses that are cash-generating. So, we don’t see any challenge, no cause of concern for us."

SBI has an overall exposure of Rs 27,000 cr in Adani group which is 0.88% of the loan book as on 31st Dec 2022. The loans are against assets & businesses that are cash-generating. So, we don’t see any challenge, no cause of concern for us: SBI Chief Dinesh Khara pic.twitter.com/mcVru9a3ZJ

— ANI (@ANI)

'Investments follow risk management framework' 

Secretary at the Department of Investment and Public Asset Management (DIPAM), Tuhin Kant Pandey said on the exposure LIC have to the group, "All the investments of the LIC including in equities are made following the company’s 'risk management framework' and that these investments go into the government securities which are managed under 'concentration risk portfolio benchmarks'. 

Referring to the public statement by LIC, he added, "LIC has already made it clear through a public notice of what their level of investments are and what is their value on a particular date of those investments."

#LIC pic.twitter.com/eqg1MMvcmo

— LIC India Forever (@LICIndiaForever)

Notably, LIC on January 30 said its total equity and debt holding under the Adani group of companies is Rs 35,917.31 Crores as on December 20, 2022 and market value for the same on January 27, 2023 was Rs 56,142 Crores. The total value of Adani group company's shares it has purchased over the last couple of years is Rs 30,127 crore. 

Citing about the total Assets Under Management (AUM) of over Rs 41.66 lakh as on September 30, 2022, the LIC claimed exposure to the Adani group at about 0.975 per cent at book value.