Amid growing political heat over the loss of public money in Adani Group’s stock rout, Union Finance Minister Nirmala Sitharaman on Friday said the exposure of LIC and SBI to billionaire Gautam Adani-led firms are within permitted limits and would not have any major impact on the Indian banking system.
“They (LIC and SBI) are not overexposed. Their exposure is very well within permitted limits,” Sitharaman said in an interview with a private news channel.
State Bank of India’s (SBI) exposure to Adani Group companies is close to Rs 27,000 crore, which is around 0.8 to 0.9 per cent of the bank’s loan book, according to SBI Chairman Dinesh Khara.
Addressing a press conference to announce the quarterly results, Khara said, “We have lent to Adani for projects which have tangible assets and have adequate cash collections. They are able to meet obligations. It is only 0.8-0.9 per cent of our loan book.”
On Life Insurance Corporation of India (LIC) exposure to Adani Group, Sitharaman said, “They (LIC) have very clearly said their exposure is well within the permitted limit and they are sitting over profit even with the valuation falling.”
Shares of Adani Group firms have crashed following the US-based short-seller Hindenburg Research’s report accusing Gautam Adani-led firms of accounting frauds and stock manipulation. Market capitalisation of nine Adani Group companies has been eroded by over $100 billion in the past one week.
It has created massive political heat. Opposition parties have been stalling parliament for the past several days and pressing for a probe in the Adani Group controversy by a Joint Parliamentary Committee.
Finance Secretary TV Somanathan said the exposure of government-run insurance firms or banks in Adani Group companies should not be a cause for any concern for the depositors, policyholders or investors.
"There is absolutely no concern from the point of view of financial stability, either for depositors, or for policyholders, or for anyone holding shares in these institutions. The share of any one company is not such as to create any impact at the macro level,” Somanathan told news agency PTI.
Meanwhile, Fitch Ratings said there is no immediate impact on credit profiles of Adani Group entities and their securities due to the stock rout following Hindenburg report.
However, the rating agency said it will closely monitor the development. “Our ongoing monitoring will be looking closely at any major changes to the rated entities’ access to financing or cost of financing on a long-term basis, unfavourable regulatory/legal developments or ESG-related matters that could affect credit profiles,” Fitch said in a report.