Days after Adani Enterprises canceled its Rs 20,000 crore follow-on public offer (FPO) following US-based short seller Hindenburg’s “stock manipulation” allegations, Union Finance Minister Nirmala Sitharaman Saturday said that India’s macro fundamentals and image are not affected by this and that it the country’s perception remained “intact”.
Addressing a press conference in Mumbai, Siharaman said, “Our macroeconomic fundamentals, the image of our economy, none of it has been affected. The fact that we have had 8 billion dollars of foreign exchange reserve growth during last two days shows that perception of India and its inherent strength is intact”.
“How many times have FPOs not withdrawn from this country and how many times has the image of India been suffering because of that and how many times have FPOs not come back?,” she asked. The minister said there are “fluctuations” in every market but the accretion over the last few days establishes the fact that the perception of both India and its inherent strengths is intact.
The Finance Minister informed that the regulators will do their job on the Adani issue and that the Securities and Exchange Board of India (SEBI) has the wherewithal to ensure the stability of markets. Sitharaman noted that the regulators are independent of the government, and “they’re left to themselves to do what is appropriate so market is well regulated”.
Meanwhile, Finance Secretary TV Somanathan on Saturday stood by his comment on the controversy where he called it a storm in a teacup, clarifying that this is in the context of macroeconomic terms and the stability of India’s public financial institutions.
Earlier on Friday, the government said exposure of banks and insurers to the Adani group was within “permitted limits”. “Both SBI and LIC have issued detailed statements… the Chairperson, the CMD has himself come out and explained how they are not overexposed… and also said, look, we are sitting over profits for the exposure… They have very clearly said their exposure is well within the permitted limits and they are even now – with the valuation falling as well – sitting over profit,” Union Finance Minister Nirmala Sitharaman said in an interview to Network18.
Sitharaman had said that 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 added.
The Reserve Bank of India, without naming the Adani group, had responded to media reports expressing concern about the exposures of banks to a “business conglomerate”, and said that 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.
Seven listed firms of Adani Group have lost about half their market value — or more than $100 billion combined — since US-based investor research firm Hindenburg Research last week accused the Gautam Adani-led conglomerate of “brazen stock manipulation and accounting fraud scheme over the course of decades”. Adani Group, however, has rejected the criticism and denied wrongdoing.
Adani, who until recently was the richest Indian in the world, has now slipped to 22nd spot in the Forbes Real-time billionaire list for 2023.
Meanwhile, the country’s largest lender SBI said its overall exposure to the Adani Group is at 0.88 per cent of the book or around Rs 27,000 crore. SBI chairman Dinesh Khara said the bank does not envisage the conglomerate facing any challenge to service its debt obligations and stressed that SBI has not given any loans against shares to the group.