Banks' exposure to Adani Group not very significant: RBI Deputy Gov MK Jain
2 min read . Updated: 08 Feb 2023, 01:17 PM IST
Premium- MK Jain while speaking on Adani Group said that domestic banks' exposure is against underlying assets, operating cash flows, projects under implementation and not based on the market cap.
RBI Deputy Governor MK Jain while speaking on Adani Group said domestic banks' exposure is ‘not very significant’ to the Adani Group and the exposure against shares is ‘insignificant’.
He further added that “Domestic banks' exposure is against underlying assets, operating cash flows, projects under implementation and not based on the market cap."
Also See LIVE updates on Adani news here
Further adding on the company, Governor Shaktikanta Das said that Indian banking sector, including NBFCs, continues to be resilient, strong, adding that RBI has made an assessment of lenders' exposure to Adani group firms; large exposure guidelines have been complied with by all banks.
He added that the strength, size and resilience of the Indian banking system now are much stronger and larger "to be affected by a case like this" in reference to the developments at Adani Group.
He was responding to a query on whether the RBI will be giving any guidance to domestic banks about their exposure to the Adani Group companies in the context of rating agencies' reports related to banks' exposure to the Group. Briefing reporters after the monetary policy announcement, Das said that when banks do lend, they take their calls on the fundamentals of a company and the expected cash flows from projects.
Also Read: RBI Monetary Policy Live Updates
Earlier on 3 February, without naming the company in the statement, the Reserve Bank had said India's banking sector is resilient and stable, and the central bank maintains constant vigil on the lenders.
Responding to media reports expressing concern about the exposure of Indian banks to a "business conglomerate", the Reserve Bank said in a statement that it is constantly monitoring the banking sector.
Hindenburg released the report on January 24 -- the day on which Adani Enterprises' ₹20,000-crore follow-on share sale opened for anchor investors.
In its statement, the RBI had said as per the current assessment, "the banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy."
"As the regulator and supervisor, the RBI maintains a constant vigil on the banking sector and on individual banks with a view to maintain financial stability. The RBI has a Central Repository of Information on Large Credits (CRILC) database system where the banks report their exposure of ₹5 crore and above which is used for monitoring purposes," the central bank had added.
