Finance Minister Nirmala Sitharaman stated on Friday that the Indian banking system and lenders are not at risk as a result of the ongoing dispute between Indian business tycoon Gautam Adani’s Adani Group and US-based short-seller Hindenburg. They are not overexposed, according to the SBI and LIC.
“They have very clearly said that their exposure (to Adani Group stocks) is very well within the permitted limits and with valuation falling as well, they are still over profit. That is the word from the horse’s mouth,” FM Sitharaman stated in a CNBC-TV18 interview. After overcoming the twin balance sheet problem, she added, the Indian banking system is now at a comfortable level, with NPAs coming to low levels, recoveries, and a sound position.
“The entire macroeconomic analysis which any expert would do also reflects the Indian banks are placed, that cannot be so if they are at risk,” she added. In an attempt to assuage investor concerns, SBI, the largest lender in the nation, stated that its exposure to the Adani Group is fully secured by cash-generating assets.
Bank of Baroda, another public sector lender, reported having a total exposure of Rs 7,000 crore to the embattled group, all of which are totally secured. Life Insurance Corporation (LIC) has reported that it has less than 1% of its entire investments—a sum totalling Rs 36,474.78 crore—to the debt and equity of the Adani Group.
After a research by Hindenburg Research questioned the conglomerate’s levels of debt and use of tax havens, seven listed Adani group companies lost more than half of their market capitalization, which fell to less than $100 billion.
Adani, whose fortunes had just seen a sharp surge, unexpectedly announced the withdrawal of its Rs 20,000 crore follow-on public offer (FPO), which had been completed successfully the day before. After the share sale was called off, investors’ moods were further jarred. The Adani Group has dismissed the claim of stock manipulation, saying it has “no basis” and is the result of an ignorance of Indian law.
The group companies have “consistently de-levered” over the past decade, according to the company. The stock market crash also marks a drastic turn of events for Adani, who has recently established partnerships with and drawn investment from foreign giants. Adani lost his position of Asia’s richest man as well, falling to 17th place in Forbes’ ranking of the world’s richest people. Adani was previously ranked in 3rd position, behind Elon Musk and Bernard Arnault.