One client will not affect Indian banking system: RBI Governor on Adani row

An particular person client — Adani Group — will not carry down the Indian banking system because the nation’s banking sector is resilient and robust, mentioned Reserve Bank of India (RBI) Governor Shaktikanta Das, defending banks’ publicity to dwindling Adani shares.

Queried concerning the Indian financial institution’s publicity to the Adani Group and the feedback of credit standing businesses, Das mentioned the Indian banking system is powerful and a person client will not affect it.

Das mentioned the banks lend cash based mostly on fundamentals of the challenge and not based mostly on the market capitalisation of the corporate. He additionally mentioned the credit score appraisal strategies of Indian banks have improved.

According to him, two years again, the RBI rationalised the massive publicity norms for banks and the norms are being complied.

Adding additional, RBI Deputy Governor Mahesh Kumar Jain mentioned the publicity of banks relies on underlying property and the publicity of the banking sector in opposition to shares is insignificant.

Global credit standing businesses — Fitch Ratings and Moody’s Investors Service — on Tuesday mentioned that Indian banks’ publicity to the Adani Group does not current any main danger to the banks’ standalone credit score profiles.

“Banks’ exposures to Adani are not giant sufficient to affect their credit score high quality materially. We estimate that their exposures to Adani are not greater than 1 per cent of their complete loans. While we estimate that the exposures are bigger for public sector banks than for personal sector banks, they’re smaller than 1 per cent of complete loans for many banks,” Moody’s mentioned.

Fitch Ratings mentioned the financial and sovereign implications of the Adani controversy stay restricted. However, there’s a tail danger that fallout from the controversy may broaden and affect India’s sovereign ranking, with knock-on results for financial institution Issuer Default Rating.

(With inputs from IANS)