'Indian banking sector not likely to be affected by an individual case,' says Shaktikanta Das on Adani row

Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday, without naming Adani Group, said that Indian banking sector, including NBFCs, continues to be strong and is not likely to be affected by an individual incident or case.

Das, while addressing a query on Indian banks' exposure to Adani Group, said that RBI has made an assessment of lenders exposure to Adani Group. He also added that large exposure guidelines have been complied with by all banks.

This comes as Adani Group slipped into probably the worst crisis in its history after US short-seller Hindenburg Research in its report accused the conglomerate of “brazen stock manipulation, money laundering, and accounting fraud scheme over the course of decades”. The short seller claimed that the report was summed up after a two-year investigation.

After this, the RBI had sought details from banks about their exposure to the group.

Speaking at the press conference after the RBI policy announcements, Das mentioned that banks do not lend on the basis of market capitalisation of a particular company.

"When banks lend money to companies, it is not on the basis of market capitalisation of that particular company. They lend on the basis of strength, fundamentals, cash flows, among other factors," he added.

The exposure of Indian banks to the embattled Adani Group is not enough to impact their credit profiles, two rating agencies said on Tuesday.

The exposure of Indian banks to Adani Group is "insufficient in itself" to present a substantial risk to the credit profiles of these lenders, Fitch Ratings said in a note.

Fitch estimated that loans to all Adani Group entities generally account for 0.8%-1.2% of total lending for Indian banks rated by the agency, equivalent to 7%-13% of total equity.

Moody's Investors Service also made similar comments, saying the exposures are larger for public sector banks than for private sector banks, but they are smaller than 1% of total loans for most banks.

(With inputs from Reuters)

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