RBI reviews local bank loans to Adani firms

The banker said that RBI supervisors overseeing some banks are requesting Adani Group loan data twice weekly, including sanctioned fund-based and non-fund-based limits and their utilisation. Fund-based instruments include credit lines, while non-fund based instruments include bank guarantees and letters of credit.

Peppermint It was informed on Monday that the RBI is closely monitoring Adani’s bank loans.

“RBI is watching very closely whether the group is getting more money from banks. These are not fresh loans, but limits already sanctioned by the lenders. The regulator has not told for how long we will have to keep collecting this data,” said the banker.

He added that the RBI wants to use this as a proxy for any impending stress in the group that may affect the banking sector. The banker said an increase in limit utilization would mean companies needing more funds from local banks and not tapping other sources.

On February 3, citing a current assessment, the RBI said that the banking sector remains resilient and stable, adding that banks are also in compliance with the macro risk framework guidelines issued by the RBI. Under the RBI’s large exposure framework, banks can lend up to 25% of their total Tier 1 capital to an associated group of companies and 20% to a standalone entity.

Emails sent to spokespersons of RBI, Adani group and its largest domestic lender State Bank of India (SBI) remained unanswered till press time. Meanwhile, reacting to a query ahead of RBI’s Monday story on monitoring of Adani loans, a spokesperson for the group had said in an emailed reply that it does not comment on speculation.

The Adani group is not seeking to refinance debt or inject capital, Bloomberg reported on Tuesday, citing its chief financial officer Jugeshinder Singh. He spoke on the sidelines of a roadshow in Hong Kong, where he is attending investor meetings. A day earlier, it was reported that senior Adani officials will present a strategy to investors that includes a liquidity plan for the next three years, a roadmap for repayment or pre-paid maturity, among other plans. On January 24, US-based short seller Hindenburg Research alleged accounting fraud and stock manipulation at its companies, allegations the group strongly denies.

Group executives have also reached out to domestic lenders, to address their concerns on the stock route and inform them that the group has enough funds to repay on time. He also informed the local banks that the group would not access additional credit over the sanctioned limit if the lenders were not comfortable with it at this point of time. “So far, some banks have seen a decline in their loan utilization levels for Adani companies. If they want to continue on their current growth path, they will probably have to start using more debt and guarantees after a few months,” said the banker quoted above.

In a report dated January 26, analysts at US-based investment banking and capital markets firm Jefferies said, over the last 5-6 years, the Adani group has diversified its lending mix and has increased its exposure to Indian banks (state-owned and private). reduced the share of Its lending increased from 86% in FY16 to 33% in FY22. According to Jefferies, this group’s loans account for 0.5% of total loans. While SBI’s exposure is 27,000 crores to the group, is on Punjab National Bank 7,000 crores, is on Bank of Baroda 5,380 crore, and on Axis Bank 7,164 crore as per official disclosures and management statements.