RBI seeks details of banks’ exposure to Adani Group

The Reserve Bank of India (RBI) has sought details about lenders’ exposures to the Adani Group, banking sources said, a day after the conglomerate withdrew the Rs 20,000-crore follow on public offer (FPO) of its flagship firm Adani Enterprises amid the steep fall in its stock prices.
On Wednesday, Swiss lender Credit Suisse stopped accepting bonds by Adani group companies as collaterals for margin lending.
The going has been tough for the diversified conglomerate over the past week ever since US-based short seller Hindenburg Research levelled a slew of allegations about the group’s operations, calling it the biggest corporate con ever. The Ahmedabad-headquartered group has denied all the allegations but failed to convince analysts and investors.
The RBI gets access to banks’ large corporate borrowers on a regular basis as part of the central repository of information on large credits (CRILC) data base, the banking sources said.
Many a time bank lending happens against pledged securities and a massive fall in the price of the equity shares of the Adani group’s 10 listed entities could have accordingly lowered the value of the pledged securities.
There has been selling pressure in banks’ stocks since the Hindenberg Research’s report released on January 24 as investors are concerned about the impact of the crisis on banks’ books.
Country’s largest lender SBI had said it’s exposure to Adani group is fully secured by cash generating assets, in an attempt to assuage investor concerns.
Another public sector lender Bank of Baroda has said its total exposure to the embattled group stood at Rs 7,000 crore, which are also fully secured.
Government-owned life insurance behemoth Life Insurance Corporation (LIC) has disclosed of having an exposure of Rs 36,474.78 crore to Adani group’s debt and equity, and added that the amount is less than one per cent of its total investments.
Adani Enterprises scrip closed 26.50 per cent down at Rs 1,564.70 a piece on the BSE on Thursday, as against gains of 0.38 per cent on the benchmark.
FPO withdrawn due to market volatility, says Gautam Adani
Billionaire Gautam Adani has said the decision to withdraw a fully subscribed share sale of the flagship firm of his group was primarily because of volatility in the market. Adani Group company stocks have lost over USD 90 billion in value since a US short seller made damning allegations.
Adani Enterprises Ltd’s Rs 20,000 crore follow-on public offer managed to get investors on the last day of the share close on Tuesday. Late on Wednesday, the company decided to withdraw the FPO and refund the investors.
“After a fully subscribed FPO, yesterday’s decision of its withdrawal would have surprised many. But considering the volatility of the market seen yesterday, the board strongly felt that it would not be morally correct to proceed with the FPO,” Adani said in an address to investors on Thursday. The decision, he said, will not have any impact on existing operations and future plans. “We will continue to focus on timely execution and delivery of projects.” The fundamentals of the company are strong, Adani asserted.
“Our balance sheet is healthy and assets robust. Our EBITDA levels and cash flows have been very strong and we have an impeccable track record of fulfilling our debt obligations. We will continue to focus on long-term value creation and growth will be managed by internal accruals.”
Adani said the group would review the capital market strategy once the market stabilizes. “We have a strong focus on ESG and every business of ours will continue to create value in a responsible way. The strongest validation of our governance principles comes from several international partnerships we have built across our different entities,” he added.