Big three banks have exposure of ₹40,000 crore on Adani firms

The exposure to Adani group companies is 0.8% of the total gross advances of the top three PSBs. Largest lender, State Bank of Indiahave exposure to 27,000 crores, while Bank of Baroda And Punjab National Bank have exposure to 5,380 crore and 7,000 crores respectively. While SBI and PNB have clearly disclosed their exposure to the Adani group, Bank of Baroda refused to disclose it but said it is a quarter of the group exposure allowed by the Reserve Bank of India (RBI). .

Under the RBI’s large exposure framework, banks can lend up to 25% of their total Tier-I capital to an associated group of firms and 20% to a standalone entity. Given that the total Tier-I capital of Bank of Baroda was 86,105 crores till December 31, will be the regulatory limit 21,526 crore, and its exposure to the group – a quarter of the limit specified by the bank – would be 5,380 crores.

Banks insisted that there was no concern with their loans and bank guarantees Adani Group, whose stock value has seen a massive drop of $110 billion in seven days, as US short seller, Hindenburg Research accused the group of stock manipulation and accounting fraud. Adani Group has denied these allegations.

“We have given loans to Adani (Group) for projects, which are tangible assets and have substantial cash generation. They are capable of meeting their obligations. SBI Chairman Dinesh Khara said, the bank’s exposure is around 0.88% of the total loan book.

Khara told reporters that the bank does not envisage any challenge to the group’s ability to service its dues. However, he said State Bank Of India No loan has been given against shares.

“Early days; there is no problem at the moment,” said Sanjiv Chadha, chief executive officer of Bank of Baroda.

“It (BoB risk) is also spread across a large number of companies. However, as a percentage of our balance sheet, this exposure has reduced over the past three years,” Chadha said, adding that about 30% of Adani firms’ exposure is either in joint ventures with public sector companies or secured by guarantees. Public Sector Firms.

While questions have been raised on the level of debt, analysts have allayed such concerns. Over the last five-six years, the group has diversified its lending mix and has reduced the share of Indian banks in its lending from 86% in FY22 to 33% in FY22 in FY2016, US-based analysts at investment banking and capital markets firm Jefferies said Jan. 26. The share of bonds and foreign banks in total debt has increased to 37 per cent and is now 18 per cent.

Finance Minister Nirmala Sitharaman said, “Both RBI and we know that today the banking sector is passing through the twin balance sheet problem, NPAs are coming down to very low levels and recoveries are happening and their condition is very good.” CNBC-TV18.