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HomeEconomyIndian banking system ‘resilient and stable’, says RBI amid concerns around Adani...

Indian banking system ‘resilient and stable’, says RBI amid concerns around Adani Group

Union Finance Minister Nirmala Sitharaman has also said the country’s markets are ‘well regulated’ and that the Adani controversy would not affect investor confidence.

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New Delhi: The Reserve Bank of India (RBI) said Friday that the country’s banking system remained “resilient and stable” amid concerns that investors were at risk following the share rout of the Adani Group after an American short-seller’s attack on its practices.

The central bank said: “Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. Banks are also in compliance with the Large Exposure Framework guidelines issued by the RBI.”

The RBI added it remains vigilant and continues to monitor the stability of the Indian banking sector, Reuters reported. The bank did not name the Adani Group.

On Thursday, the RBI had asked banks for details of their exposure to the Adani group of companies. Information sought included details of collateral being used to back loans and any indirect exposure the banks may have, sources said.

Meanwhile, Union Finance Minister Nirmala Sitharaman said the country’s markets were “well regulated” and that she did not foresee the Adani controversy to affect investor confidence.

US firm Hindenburg Research in a report on 24 January accused the group led by billionaire Gautam Adani of accounting fraud and artificially boosting its share prices. The report called this a “brazen stock manipulation and accounting fraud scheme” and “the largest con in corporate history”.

Meanwhile, Opposition parties kept up the heat on the central government in Parliament Friday over the Adani issue, demanding a discussion and a probe on whether the common investor’s money would be depleted.

They said the State Bank of India (SBI) and the Life Insurance Corporation (LIC) had been forced to invest in the Adani Group, which has lost nearly $120 billion since the report.

SBI, the country’s largest lender, said Friday it had no concerns regarding its exposure to the embattled group and that any further financing to the conglomerate’s projects would be “evaluated on its own merit”.

SBI’s total exposure to the conglomerate was 0.9% of its total loan book, or around Rs 270 billion ($3.30 billion), Chairman Dinesh Kumar Khara said on a post-earnings call.

The state-backed LIC said two days ago that the insurance company was positive on the investments in the Adani Group. Managing Director and Chief Executive Officer Siddhartha Mohanty told CNBC-TV18 that the investments were within prudent norms. He added: “We talk to companies that we invest in as a routine.”


Also read: ‘No need for concern over SBI, LIC exposures’: Finance Secretary Somanathan on Adani stock rout


 

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