Home / Companies / Lenders want a share of SBI’s Adani loan pie

MUMBAI : State Bank of India’s (SBI’s) nod to lend 12,770 crore to Adani Enterprises’ arm Navi Mumbai International Airport Pvt. Ltd has generated a lot of interest among rival banks, with a group of five lenders willing to jointly take over a majority of the loan, said two people aware of the development. While SBI entirely underwrote the 15-year loan, five other banks are in the process of taking board approvals to join the lending consortium, they said, requesting anonymity. The names of the banks could not be immediately ascertained.

Lending opportunities to large infrastructure projects have become rare these days as corporates are funding their limited capex either through internal accruals or tapping debt markets. The rising interest rate scenario is likely to change the trend in favour of lenders as bank loans become cheaper than accessing bond markets for companies because of slower transmission of policy rate changes by lenders for corporate loans.

The people cited above said that the Adani loan proposal is generating strong interest among lenders as it is one of the largest projects in recent times. India’s largest lender SBI is planning to retain about 30-40% of the total loan on its books while others will take over the rest.

“Banks taking over the loan would have to agree on the interest rate of 7.1%. The loan is benchmarked to SBI’s six-month marginal cost of funds-based lending rate (MCLR) at 6.95% and has a 15-basis point (bps) spread," one of the two people said.

Emails sent to spokespeople for SBI and Adani Enterprises remained unanswered till press time.

The Adani group said on 29 March that Navi Mumbai airport achieved financial closure for the greenfield project. After two pandemic-affected years, the aviation sector’s revival is gathering momentum as countries reopen borders and lift travel curbs. Bankers are therefore hopeful of a turnaround in the industry, propping up their wilting corporate credit growth.

“Going by the increasing demand for air travel in India, larger cities like Mumbai and Delhi would need more airports to cater to this. The government’s infrastructure push in this regard will lead to more loan disbursals," said the second person.

Planned in the 1990s, the Navi Mumbai airport has seen several delays. Last year, Adani Airport Holdings Ltd (AAHL), a wholly-owned unit of Adani Enterprises Ltd, took over management control of Mumbai International Airport Ltd from the GVK Group and is now in charge of building the airport.

According to the second person, demand for infrastructure loans is improving as companies firm up capex plans. While there is a capex push by the government with a 35% higher outlay of 7.5 trillion in 2022-23, private capex is yet to take off as anticipated.

Rating agency Icra said growing order books of capital goods companies point to traction in private capex in FY23. Mint reported on 4 April that lenders are witnessing a gradual revival in corporate term loan demand, especially for infrastructure projects.

According to the Reserve Bank of India (RBI), infrastructure project loans grew 12% to 11.9 trillion in February from a year earlier. While this is encouraging, considering that infrastructure loans grew 0.3% in the year through February 2021, outstanding bank credit to the sector has contracted since the beginning of 2021-22.


Shayan Ghosh

Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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