SBI's loan exposure to Adani Group: CreditSights report says 'don't see an issue'
1 min read . Updated: 09 Feb 2023, 06:10 PM IST
Premium- SBI's entire loan exposure to the Adani Group is quite manageable: CreditSights
Given its substantial general provision reserves buffer of 338 billion rupees or 1% of net loans, SBI's entire loan exposure to the Adani Group is quite manageable, according to a report published on Tuesday, February 7 by CreditSights, a division of Fitch Ratings.
“Do not see loan exposure to Adani Group as an issue for the State Bank of India (SBI) given its strong general provision reserves buffer," the note stated. SBI's total exposure to the conglomerate was 0.9% of its total loan book, or around 270 billion rupees, Chairman Dinesh Kumar Khara said on Friday.
CreditSights pointed out that the country's largest lender has a provision reserves buffer of around 338 billion rupees ($4.08 billion), or around 1% of net loans. It added SBI also has the capacity to generate pre-provisioning operating profit, or income before taking into account future bad debt provisions.
Additionally, most of the bank's exposure to the Adani Group was secured by completed and cash-generating assets while the rest of the exposure was to on-schedule, under-construction projects, said CreditSights.
SBI's Khara has said the Adani Group's exposure did not pose any concern for the bank and that he did not see any challenges to the conglomerate's ability to service its debt obligations.
In August last year, Fitch Group's unit CreditSights called the conglomerate ‘deeply overleveraged’ and flagged other risks. Later, following a conversation with the management, it said in September that it discovered calculation errors in its debt report on the two power and transmission companies of the Group and corrected the data.
The Indian banks' exposure to the group have come in focus ever since late January when US-based short-seller Hindenburg Research alleged improper use of offshore tax havens and stock manipulation by the conglomerate. The group has rejected the criticism and denied wrongdoing in detailed rebuttals.
