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RBI's Check-In With Banks, Ruckus in Parliament: The Latest on Adani Group Row

It has been a tumultuous few weeks for the billion-dollar conglomerate.

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The Adani Group's woes have gotten real as it has reportedly caught the attention of Indian regulators.

Driving the news: The Reserve Bank of India (RBI) on Thursday, 2 February, has directed banks to lay out their exposure to the Adani Group's companies, The Indian Express reported.

  • This comes a day after the conglomerate back-pedalled on its Rs 20,000 crore Follow-On Public Offering (FPO)

  • Reuters reported that the share sale is under scrutiny by SEBI, India's market regulator

  • A probe by a joint parliamentary committee or a Supreme Court-monitored panel has been demanded by the Congress and other Opposition parties

How it started: The controversy was kicked off by a US short seller, Hindenburg Research, who bet against and accused the Adani Group of accounting fraud, stock market manipulation, and money laundering, among other allegations.

Why it matters: With the Adani Group firms' share prices still tanking, there could ripple effects in the market as shares of other group firms have also reportedly followed suit.

  • "A significant volume of public money through SBI and LIC is locked in the Adani Group," Congress whip Manickam Tagore said in his adjournment motion.

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Banks jittery? Both Credit Suisse and Citigroup's wealth unit have stopped sanctioning margin loans to clients putting up securities of Adani Group firms as collateral.

  • The total exposure of Punjab National Bank (PNB) to the Adani Group amounts to Rs 7,000 crore

  • Bank of Baroda's exposure is around Rs 4,000 crore

  • The exposure of State Bank of India and other banks are not yet known

What they're saying: On the overall impact to India's banking sector, SBI managing director Swaminathan J said, "As is known, most of their acquisitions have been financed through overseas borrowings and market instruments, hence there is no exposure built up to the Indian banking system on this count."

  • "Despite plunging shares (of Adani Group), LIC purchased firm's shares. Now Central government should tell if employees' money for post-retirement will be snatched away? One report & it collapsed like a pack of cards despite that LIC, SBI money being used that's worrying," Chhattisgarh CM Bhupesh Baghel said on Thursday.

  • "Presently there is a situation that's emerging and we are not sure what is the factual position...since we are a large investor, we have the right to ask relevant questions and we will definitely engage with them [Adani Group]," LIC Managing Director Raj Kumar had said last week.

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Topics:  Reserve Bank of India   SEBI   Adani 

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