No systemic risk to Indian financial system from recent events: Uday Kotak

“I do not see systemic risk to Indian financial system from recent events,” Kotak, who is the managing director and CEO of Kotak Mahindra Bank, wrote on microblogging site Twitter on Sunday.

He, however, said large Indian corporates rely more on global sources for debt and equity finance, which creates challenges and vulnerabilities.

“Time to further strengthen Indian underwriting and capacity building,” Kotak further wrote.

The flagship of the Adani group, Adani Enterprises (AEL), came under huge selling pressure and its stock fell by 54 per cent after the Hindenburg Research report on the Adani Group came out on January 24. Nine other listed Adani stocks had crashed by up to 50 per cent since then and even led to an intra-day fall in the Sensex on February 1 when the Budget was announced.

The Group had to call off AEL’s follow-on public offer (FPO) a day after it managed to get full subscription to the issue, following interest from non-institutional investors and family offices of large corporations.

On Saturday, capital markets regulator Sebi issued a statement underlining its surveillance measures. It also assured of “appropriate action” in all “specific entity related matters”.

The Reserve Bank of India (RBI) also on Friday said the banking sector remains resilient and stable.

According to a report by investment firm CLSA, top-five Adani group companies – Adani Enterprises, Adani Ports, Adani Power, Adani Green and Adani Transmission – have a consolidated debt of Rs 2.1 lakh crore. Indian bank’s exposure is less than 40 per cent of the total group debt. Within this, private banks’ exposure is below 10 per cent of total group debt.

Banks, however, have come on record to say that their exposure to the Group is within the Large Exposure Framework (LEF) of the RBI and is secured by cash generating assets.

On Friday, State Bank of India’s (SBI) Chairman Dinesh Khara said the bank’s total outstanding exposure to the Adani Group stands at 0.9 per cent, or Rs 27,000 crore, of its total loan book size of Rs 31.33 lakh crore as on end-December 2022.