Govt breaks its silence on Adani: SBI, LIC exposure within ‘limits’

Asked about the nervousness in the stock markets, Sitharaman said they will continue to hold high. “The immediate impact of the Budget on the market and subsequent to, let’s say for whatever reason, it trailed back, I think in the next few days the Budget’s impact will still continue to hold the markets high,” she said.

According to the Finance Minister, the banking sector’s position is “comfortable” right now. “…having gone through the twin balance sheet problem, Indian banking sector today is at a comfortable level. With their NPAs coming down to absolutely low levels, recoveries happening, and their position is very sound which gets reflected in the fact that when they go to raise monies in the market, they are absolutely comfortable raising monies as well,” she said.

Responding to media reports expressing concern about the exposures of banks to a business conglomerate, the Reserve Bank of India, did not name Adani, but said, as per its assessment, “the banking sector remains resilient and stable.” Banks are also in compliance with the Large Exposure Framework guidelines issued by the RBI, it said.

A senior finance ministry official said, the Adani Group did not yet fall in the “too big to fail” category. The official, however, said given the upheaval in the shares of the Adani Group companies and the progress of its flagship Adani Enterprises Ltd’s Rs 20,000 crore follow-on public offer, the Securities and Exchange Board of India, should have intervened.

The official, however, said the Finance Ministry did not feel the need to tell the regulators to act in one way or the other. “First it is about one company, one group… there was no systemic risk… and it is for the regulators to act on their own should they feel the need so,” the official said, requesting anonymity.

“The exposure of LIC towards Adani Group is around 1 per cent, while for public sector banks is also less than 1 per cent. So, the Group cannot be termed as too big to fail, yet… unlike IL&FS, this issue seems more similar to the Satyam incident as the underlying assets are still revenue-earning assets… now, with the recent turn of events, regulators will be more alert on such an issue…regulators such as SEBI should have stepped in earlier,” the official told The Indian Express.

The country’s largest lender State Bank of India (SBI) on Friday said the total outstanding exposure of the bank to the Adani Group currently stands at 0.9 per cent, or Rs 27,000 crore, of the total loan book. “As far as the quantum (of loans to the Adani Group) is concerned, that is about 0.8-0.9 per cent of our total loan book. Our total loan book size is Rs 31 lakh crore (as on end-December 2022), so it (outstanding exposure to the Adani Group) should be Rs 26,000-27,000 crore,” SBI’s Chairman Dinesh Khara said, adding that any fall in the Group’s stock market prices will not have any impact on the loans it has raised from the lender.