With questions emerging on PSU banks' exposure to the embattled Adani Group, Reserve Bank of India on Friday clarified that as per its current assessment, India's "banking sector remains resilient and stable".
"There have been media reports expressing concern about the exposures of Indian banks to a business conglomerate. 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 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," said RBI in a statement.
RBI's clarification comes days after a Reuters report that said the banking regulator has asked PSU banks for details of their exposure to Adani Group companies.
RBI said as per its 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. The RBI remains vigilant and continues to monitor the stability of the Indian banking sector," said the banking regulator.
State Bank of India (SBI) chairman Dinesh Khara on Friday said that the bank’s total exposure to Adani Group is 0.9 per cent of the overall loan book, which is around Rs 27,000 crore, adding that the bank has no concerns so far regarding its exposure to the ports-to-power conglomerate. He added that any further financing to the conglomerate's projects would be "evaluated on its own merit".
Khara, who was on a post Q3 earnings call, said that the bank does not envisage the tumult-hit conglomerate facing any challenge to service its debt obligations.
“Lending to Adani Group projects is with regard to ones having tangible assets and adequate cash flows,” Khara said on Friday. He added that the conglomerate has an excellent repayment record.
Adani Group firms' stocks lost combined market capitalisation of over $100 billion in the past week after US short-seller Hindenburg Research published a report on the group’s activities, where it accused the conglomerate of “brazen stock manipulation, money laundering, and accounting fraud scheme over the course of decades”.
Bank of Baroda on Friday said the public lender has "absolutely no concern" about its exposure to tumult-hit Adani Group. After announcing December quarter results, the banks said its exposure to Adani Group is one fourth of the large exposure framework of RBI. "As percentage of balance sheet, exposure to Adani Group has come down," Reuters quoted a bank executive as saying.
The executive said the lender got no request from Adani Group for refinance till now.