According to a report published on Thursday, the country’s largest public lender, State Bank of India, has made loans to Adani Group companies worth up to Rs 21,000 crore ($2.6 billion). This is half of what is allowed under the rules.
According to the report, SBI’s exposure includes $200 million from its overseas units. SBI Chairman Dinesh Kumar Khara stated earlier on Thursday that the tumultuous Adani Group companies were servicing the loans and that he does not see a “immediate challenge” to whatever the bank has lent so far.
On Thursday, SBI’s scrip on BSE was trading nearly flat at Rs 527.75.
Adani Group’s stocks have lost over $100 billion in market capitalisation in the last week as a result of a scathing report by the US-based short seller firm Hindenburg Research.
Hindenburg Research stated that it has short positions in Adani Group companies via US-traded bonds and non-Indian derivative instruments.
According to Hindenburg’s report, the seven listed companies in the Adani group have an 85% downside on a fundamental basis due to exorbitant valuations.
“Key listed Adani companies have also taken on substantial debt, including pledging shares of their inflated stock for loans, putting the entire group on precarious financial footing,” Hindenburg said.
Earlier on Thursday, it was reported that the Reserve Bank of India had requested information about PSU banks’ exposure to the Adani Group of companies. The RBI is looking for information on collateral used to back loans as well as any indirect exposure banks may have.
“There is nothing alarming about Adani exposure and we don’t have any concerns as of now,” Khara told last week, adding that Adani Group hasn’t raised any recent funds from the bank.
According to a report released on Wednesday by Societe Generale, the Indian banking sector’s direct exposure to the Adani group was only 0.6%. It claimed that markets are “overpricing” the risk of Adani Group exposure to Indian lenders, and that a selloff in banking shares appeared overdone.
Adani group shares sank on Thursday after it abandoned its flagship company’s $2.5-billion stock offering, swelling the conglomerate’s market losses to more than $100 billion and sparking worries about the potential systemic impact.
Adani Enterprises fell nearly 20% on Thursday, reaching its lowest level since March 2022. Other group companies were also hit hard: Adani Ports and Special Economic Zone fell 5%, while Adani Total Gas, Adani Green Energy, and Adani Transmission all fell 10%.
Nifty Bank index has lost 5.4% since the New York-based short-seller released its report.
Punjab National Bank has a total exposure to Adani Group of Rs 7,000 crore, but there is currently no cause for concern, according to the state-run lender’s managing director and chief executive on Monday.
“Out of Rs 7,000 crore, around Rs 2,500 crore is related to Adani’s airport business,” PNB CEO Atul Kumar Goel told reporters at a virtual press conference after the company’s quarterly results. “Whatever the exposure we are having is backed by cash flow.”
However, Goel stated that the bank is keeping a “close eye” on the developments surrounding Hindenburg’s research report.