Cong demands ‘serious probe’ by RBI, SEBI into charges against Adani Group

“Furthermore the high exposure of financial institutions such as the Life Insurance Company of India and the State Bank of India to the Adani Group has implications for financial stability and for the crores of Indians whose savings are stewarded by these pillars of the financial system,” Ramesh added.

Pointing out that earlier reports had described the Adani Group as “deeply over-leveraged”, Ramesh said: “The allegations require serious investigation by those who are responsible for the stability and security of the Indian financial system, viz. the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI).”

Noting that the Hindenburg report has alleged “brazen stock manipulation” and “accounting fraud” by the Adani Group via “a vast labyrinth of offshore shell entities”,” he said the evolution and modernisation of India’s financial markets since the 1991 reforms has aimed to improve transparency and to level the playing field for domestic and foreign investors.

“It has specifically sought to increase the transparency of financial flows into the country — to prevent round-tripping and money-laundering by actors that could include criminals, terrorists and hostile countries — and to reduce dependence on offshore tax havens. For all its posturing about black money, has the Modi government chosen to turn a blind eye towards illicit activities by its favourite business group? Is there a quid pro quo? Will SEBI investigate these allegations to the fullest and not just in name?” he asked.

While the allegations of financial malfeasance were bad enough, he said “what is worse is that the Modi government may have exposed India’s financial system to systemic risks through the liberal investments in the Adani Group made by strategic state entities like LIC, SBI and other public sector banks”.

“These institutions have liberally financed the Adani Group even as their private sector counterparts have chosen to avoid investing because of concerns over corporate governance and indebtedness. As much as 8% of LIC’s equity assets under management, amounting to a gigantic sum of ₹74,000 crore, are in Adani companies and comprise its second-largest holding. State-owned banks have lent twice as much to the Adani Group as private banks, with 40% of their lending being done by SBI. This irresponsibility has exposed the crores of Indians who have poured their savings into LIC and SBI to financial risk,” he said.

“If, as alleged, the Adani Group has artificially inflated the value of its stock through manipulation, and then raised funds by pledging those shares, banks such as SBI could face heavy losses in the event of a fall in those share prices. Indians are increasingly aware of how the rise of Modi’s cronies has exacerbated the problem of inequality, but need to understand how this has been financed by their own hard-earned savings. Will the RBI ensure that risks to financial stability are investigated and contained? Are these not clear-cut cases of ‘phone banking’?” he asked.

The Congress, especially its senior leader Rahul Gandhi, has often accused the BJP government of favouring only a handful of businessmen and running a crony capitalist economic model. Reiterating that charge, Ramesh said the Adani Group has built monopolies in ports and airports and become an overwhelmingly dominant player in power, roads, Railways, energy and media.

“We fully understand the close relationship between the Adani Group and the current government. But it is incumbent on the Congress party as a responsible opposition party to urge SEBI and RBI to play their roles as stewards of the financial system and to investigate these allegations in the wider public interest,” he added.