India's RBI says banking system is 'resilient' amid Adani Group scandal

The Reserve Bank of India has reportedly asked lenders for details of their exposure to Adani companies

India's banking sector remains 'resilient and stable', the RBI said. Reuters

The Reserve Bank of India (RBI) on Friday said the country’s banking system was “resilient” after concerns were expressed about the exposure of Indian banks to the embattled Adani Group.

“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 banking sector remains resilient and stable,” RBI said in a statement, without directly naming the business conglomerate.

“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,” it said.

Adani Group, a port-to-energy business founded by Indian billionaire Gautam Adani, has suffered massive losses after last week’s report by US short-seller Hindenburg Research which accused the conglomerate of alleged financial fraud.

Hindenburg, which specialises in activist short-selling, made wide-ranging allegations of purported corporate malpractice, “brazen” market manipulation and accounting fraud after a two-year investigation.

The report triggered a sell-off across listed Adani companies, wiping out about $112 billion of their market value as of Friday.

The RBI has asked lenders for details of their exposure to Adani Group companies, Bloomberg and Reuters reported.

The country’s biggest lender, State Bank of India, said on Friday that its exposure to Adani Group stood at about 270 billion rupees ($3.3 billion), or 0.9 per cent of its loan book.

Dinesh Khara, the bank's chairman, told reporters that there were no concerns so far regarding its exposure to the conglomerate.

On Thursday, Indian lender IDFC First Bank also said that it was “comfortable” with its ties to the Adani group.

The RBI said on Friday that it has a central repository of information on a large credits database system, where banks report their exposure of 50 million India rupees and above, which is used for monitoring purposes.