Amid the raging controversy over a damaging report by Hindenburg Research on the Adani Group, industrialist and banker Uday Kotak on Sunday said that he does not see systemic risk to the Indian financial system from recent events. He, however, said that large Indian corporates rely more on global sources for debt and equity finance.
"This creates challenges and vulnerabilities. Time to further strengthen Indian underwriting and capacity building," Kotak, CEO of Kotak Mahindra, said.
Gautam Adani's Adani Group has been shaken by US-based short-seller Hindenburg Research, which has accused the group of fraud and stock manipulation. Following the report, the shares of Adani Group companies crashed nearly 60 per cent, wiping out $100 billion in just seven sessions.
Earlier this week, the Reserve Bank of India (RBI) asked banks to share detail about their exposures to the Adani Group. On Friday, the central bank said there had been reports expressing concern about the exposures of the banks to the business embattled conglomerate.
As the regulator and supervisor, the RBI said it maintains a constant vigil on the banking sector and on individual banks with a view to maintaining financial stability. "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," it said.
Meanwhile, market regulator SEBI also said that all surveillance systems were in place to manage excessive volatility in individual equities in order for the market to function smoothly and efficiently.
With effect from February 3, the National Stock Exchange has placed Adani Enterprises, Adani Ports, and Ambuja Cements within the ASM (Additional Surveillance Margin) framework, requiring 100 per cent margin to trade in their shares.
Political parties have demanded setting up a Joint Parliamentary Committee (JPC) to investigate the allegations of fraud and stock manipulation against the Adani Group. Union Commerce and Industry Minister Piyush Goyal recently assured that regulators are well-equipped to handle the crisis and will take appropriate measures in response to claims of fraud against billionaire Gautam Adani's enterprises.
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