RBI, govt bid to calm nerves on Adani stock

MUMBAI, FEB. 4: With the Adani group saga still unravelling, the regulators and the Centre on Friday came up with clarifications to calm investors’ frayed nerves. While the Reserve Bank of India sought to allay the concerns about lenders’ exposure to Adani Group saying the banking sector remains resilient and stable, Union finance minister Nirmala Sithraman reiterated that the exposure of State Bank of India and the Life Insurance Corporation is within limits.

Sitharaman said in a television interview that government-owned financial institutions do not have overexposure in Adani group stocks. On LIC’s exposure, the finance minister said even with valuations falling, the company is still sitting on profits.

SBI chairman Dinesh Khara also chipped in, clarifying that the bank’s exposure to Adani group is only 0.88% of its total loans, or Rs 27,000 crore, while Bank of Baroda said its exposure is one-fourth of the permissible ceiling.

However, there was no respite for Adani as bad news kept pouring. Credit rating agency Moody’s said the recent sell-off in Adani shares could reduce the group’s ability to raise capital and that it is assessing overall financial flexibility, including liquidity position of Adani firms.

Taking a harsh stand, S&P Dow Jones Indices said it would remove Adani Enterprises from the widely used sustainability indices on February 7, making the shares less appealing to environment-conscious investors. In another blow to the Indian conglomerate, S&P Global Ratings revised its outlook for Adani Ports and Special Economic Zone and Adani Electricity from ‘stable’ to ‘negative’.

However, the Gautam Adani-led group found backing from Fitch Ratings, which said there is no immediate impact on the ratings of Adani entities and their securities. On Friday, shares of Adani Enterprises recovered after hitting a fresh 52-week low of Rs 1,017.45 on the NSE.

Meanwhile, amid Opposition parties’ clamour for a Joint Parliamentary Committee probe, Union minister Pralhad Joshi said on Friday that the government has nothing to do with the Adani issue.

-TNIE