Indian banks respond to RBI query on exposure to Adani Group. SBI, Bank of Baroda and PNB claim they are safe

It’s been over a fortight since Hindenburg Research opened a Pandora’s Box on the Adani Group. Immediate ideas involved retail traders, and the collective exposure that state-run banks in India have to the enterprise conglomerate.

Reportedly, nation’s high three state-run banks, State Bank of India, Bank of Baroda and Punjab National Bank have an mixture exposure to the tune of Rs 40,000 crore to numerous entities of the Adani Group.

Reserve Bank of India, with out naming the conglomerate, allayed fears of any stress on banks’ books however that has not been barely sufficient. After all, there are few parallels to inventory manipulation and accounting frauds of this scale.

“The RBI stays vigilant and continues to monitor the soundness of the Indian banking sector.” As the regulator and supervisor, the RBI maintains a continuing vigil on particular person banks with a view to preserve monetary stability,” mentioned the central financial institution.

State Bank of India

Adani Group’s largest lender State Bank of India has an exposure of Rs 27,000 crore to the group. It should be famous that SBI has sanctioned a credit score restrict of Rs 55,000 crore of which solely Rs 27,000 crore has been availed. Some stories additionally advised that banks are possible to proceed with their present credit score line to the embattled Adani group.

SBI Chairman Dinesh Khara mentioned that the financial institution does see the group going through any problem to service its debt obligations. Responding to some of the foremost considerations, he additionally mentioned that SBI had not given any loans in opposition to shares to the group however the lending has been in opposition to tangible property. “The financial institution’s complete exposure to Adani Group is 0.9% of the general mortgage e-book, which is round Rs 27,000 crore.”

Bank of Baroda

Bank of Baroda, which has an exposure of round Rs 5,380 crores to the group, declined to disclose it. Although it clarified that the financial institution’s exposure is a fourth of the group exposure permitted by the Reserve Bank of India. Amidst the various figures quoted by a number of stories, as per one of the estimates, out of the entire $9billion exposure that Indian banks have to the group, about $1.5 billion is but to be used.

Punjab National Bank

Last time, when Punjab National Bank hit the nationwide headlines, it was when diamontaire Nirav Modi fled the nation pulling of a rip-off the place the financial institution issued fraudulent letter of enterprise price Rs 10,000 crore.

In the present Adani Group fiasco, PNB has exposure price Rs 7000 crore. Despite the market volatility, allegations and disaster surrounding the group, PNB CEO Atul Kumar Goel said there is no such thing as a trigger for concern.

In a latest digital press convention, Goel mentioned, “Out of the Rs 7,000 crore, roughly Rs 2,500 crore is tied to Adani’s airport enterprise. Cash move is supporting the course we now have.” However, Punjab National Bank reported a 44% decline in internet revenue for the quarter ending December due to enhance in unhealthy loans. This comparability determine is in opposition to a internet revenue of Rs 1,126.8 crore within the yr in the past interval.

Axis Bank

Following RBI query looking for particulars from banks on their exposure to the group, non-public sector lender Axis Bank mentioned on February 4 that its exposure to Adani Group stood at 0.94 % of its internet advances. In a regulatory submitting, the financial institution furnished the small print, “We lengthen credit score foundation consolation on money move, safety, and reimbursement functionality of obligators as per the Bank’s credit score evaluation framework. We stay snug with our exposure to Adani Groupon the idea of the identical.”

It additionally mentioned that their exposure to the group is primarily to the working corporations in sectors like ports, transmission, energy, gasoline distribution, roads and airport. “Axis Bank’s fund-based excellent as share of the web advances is 0.29%, whereas that of non-fund based mostly excellent is 0.58%.” The lender additionally mentioned that investments as per centage of internet advances of the financial institution is 0.07% as of December 31, 2022.

The opposition

As the opposition plans protests exterior a number of state owned places of work of LIC, SBI and different monetary entities having exposure to Adani Group, the noise over accountability and transparency good points momentum. The disaster ridden group’s seven listed corporations has seen one other sell-off driving their market loss to a whopping $112 billion in lower than a fortnight.

The demand for a debate, a press convention and PM Modi’s reply on the Adani Group has been rising louder and wider. On Monday, the Lok Sabha was adjourned till 2pm amidst the protest by members of the Congress, DMK, NCP and different political events.