Bank exposure within limits, regulator says

“Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. Banks are also in compliance with the Large Exposure Framework (LEF) guidelines issued by the RBI. The RBI remains vigilant and continues to monitor the stability of the Indian banking sector,” RBI said.

In a press release, RBI said that it is issuing this clarification as there have been media reports expressing concern about the exposures of Indian banks to a business conglomerate. The regulator has a Central Repository of Information on Large Credits (CRILC) database system where the banks report their exposure of ₹5 crore and above which is used for monitoring purposes, it said.

Mint was the first to report on 31 January that RBI has sought details of bank wise exposure to the Adani group. The conglomerate has lost nearly $100 bn in market value ever since the US short seller Hindenburg Research came out with a report alleging, fraud and price manipulation.

On 26 January, Hong Kong-based brokerage and investment group CLSA said that Indian banking exposure is less than 40% of the total Adani group debt. Of that, the exposure of private banks is below 10% of total group debt, while PSU banks have 30% of group debt.

CLSA estimates that the group has a bank debt of ₹70,000-80,000 crore out of the total ₹2 trillion of debt at the end of FY22.

Banks like SBI, Bank of Baroda and Punjab National bank have a total exposure of ₹40,000 crore to Adani Group. All the banks have clarified that their exposure is below the permissible limit and that they are fully backed by assets.