Adani crisis: Banking sector resilient and stable, says RBI

Mumbai: Amid concerns over banks' exposure to the crisis-ridden Adani Group, the Reserve Bank on Friday said that India's banking sector is resilient and stable and the central bank maintains constant vigil on the lenders. Responding to media reports expressing concern about the exposure of Indian banks to a business conglomerate, the Reserve Bank said in a statement that it is constantly monitoring the banking sector. However, the RBI did not name the Adani Group in the statement.

Banking sector remains resilient and stable: RBI

In its statement, the RBI said that as per the current assessment, "the banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy."

"As the regulator and supervisor, the RBI maintains a constant vigil on the banking sector and on individual banks with a view to maintain financial stability. The RBI has a Central Repository of Information on Large Credits (CRILC) database system where the banks report their exposure of Rupees five crore and above which is used for monitoring purposes," the central bank added.

RBI seeks details of banks' exposure to Adani Group

RBI is vigilant & monitoring the stability of banking sector

The RBI said that it remains vigilant and continues to monitor the stability of the Indian banking sector. It further said that the banks are also in compliance with the Large Exposure Framework (LEF) guidelines issued by the RBI.

The Reserve Bank of India (RBI) earlier this week sought details about lenders' exposure to the Adani Group. On Wednesday, Swiss lender Credit Suisse stopped accepting bonds by Adani group companies as collateral for margin lending.

SBI has an exposure of Rs 27,000 cr & PNB has exposure of Rs 7,000 cr

Three leading public sector banks have already disclosed their exposure to the Adani Group. The country's largest lender State Bank of India (SBI) has an exposure of Rs 27,000 crore, while that of the second biggest Punjab National Bank (PNB) is at Rs 7,000 crore.

Another state-owned lender Bank of Baroda has total exposure of Rs 7,000 crore, which is also fully secured. Government-owned life insurance behemoth Life Insurance Corporation (LIC) has disclosed holdings of Rs 36,474.78 crore in Adani group's debt and equity.
Earlier, the conglomerate withdrew the Rs 20,000-crore follow on public offer (FPO) of its flagship firm Adani Enterprises amid a steep fall in its stock prices.

Besides Credit Suisse Group AG, Citigroup Inc's wealth arm has also stopped accepting securities of Adani Group firms as collateral for margin loans as banks ramp up scrutiny of the conglomerate's finances.

Congress has alleged that LIC & SBI have been forced to invest in the Adani Group

The Opposition has been stalling Parliament for the past two days demanding a Joint Parliamentary Committee or Supreme Court monitored probe into the affairs of the group. They alleged that the drastic fall in Adani Group shares on Indian exchanges has put public money in danger as public sector LIC and SBI have invested in those companies.
The Congress has alleged that the LIC and SBI have been forced to invest in the Adani Group.

Meanwhile, Moody's Investors Service on Friday said that it is assessing overall financial flexibility, including liquidity position, of Adani Group firms. "These adverse developments are likely to reduce the group's ability to raise capital to fund committed capex or refinance maturing debt over the next one to two years," Moody's said. However, another rating firm Fitch Ratings said there is no immediate impact on the ratings of Adani entities and their securities.

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