FM Sitharaman says both LIC and SBI have their exposure to Adani Group 'well within permissible limits'

Finance Minister Nirmala Sitharaman on Friday said both State Bank of India and Life Insurance Corporation have issued detailed statements with respect to their exposure to the embattled Adani Group and have said their exposure is well within permissible limits. 

Sitharaman's first reaction on the Adani-Hindenburg row came in an interview with a news channel as Parliament has been rocked lately with Opposition demanding discussion on LIC's investment in Adani Group firms. 

"Our regulators are very stringent about governance practices and have kept our markets in prime condition. The Indian banking system is at a comfortable level," she said. 

US short seller Hindenburg Research accused the Adani Group last week of improper use of tax havens and stock manipulation, while also raising concerns over high debt levels.

The ports-to-power conglomerate has denied the accusations, saying the short-seller's allegation of stock manipulation has "no basis" and stems from an ignorance of Indian law.

Hindenburg's report has led to a stock rout in Adani Group's seven listed companies, which have lost more than $100 billion combined, or about half of their market value.

Sitharaman said that State Bank of India and Life Insurance Corporation have stated that they are not overexposed to the Adani Group. "I want to recall the words...the words coming from the horse's mouth has greater credibility. Both SBI and LIC have issued detailed statements, the chairperson has himself come out and explained how they are not overexposed or whatever they said and also said, look, we are sitting over profits for the exposure that they have which is well within the limits, that's what I understand they have said and have read it through the media," the minister said.

"They have very clearly said that their exposure is very well within the permitted limits and that they are even now with a valuation falling as well, they are still sitting over profits. So if that is the word from the horse's mouth...but in general both with the RBI, we do have the Financial Stability Board's meeting which happens once in six months. We meet, even recently we have met," she added. She said RBI continues to monitor the stability of banking sector.

"I can only very clearly say both the RBI and we, because of the FSB's meeting know that the Indian banking system at this stage for me to use this word, I want to use this word with a sense of responsibility, like having gone through the twin balance sheet problem, the Indian banking sector today is at a comfortable level with their NPAs coming down to absolutely low levels, recoveries happening and their position is very sound, which gets reflected in the fact that when they go to raise monies in the market, they are absolutely comfortably raising money as well. So the entire macro-economic analysis which any expert would do also highlights the fact that how comfortable the Indian banks are placed. That cannot be that if they are at risk," Sitharaman said. The minister was responding to a query about the opposition targeting the government and stating that banking and insurance companies have large exposure in Adani's stock about some directions broader markets may be looking to.

The opposition parties have forced adjournments in both Lok Sabha and Rajya Sabha over their demands concerning Hindenburg-Adani row. They have sought discussion over investment by LIC, Public Sector Banks, and financial institutions "in companies losing market value, endangering the savings of crores of Indians".

India remained "an absolutely well governed" country and a "very well-regulated financial market", Sitharaman told the news channel.

"One instance, however much talked about globally, I would think is not going to be indicative of how well Indian financial markets have been governed," said the finance minister.

She said the investor confidence that existed before shall continue even now.