Adani Group Vs Hindenburg: There is nothing worrisome about our exposure to Adani, Says SBI, LIC
February 2023: Shares of Adani group companies saw a sharp sell-off for the second straight session on Friday, wiping out more than $51 billion in the combined market value of the companies led by billionaire Gautam Adani.
Shares of Adani companies started to sell off after US-based investment research firm Hindenburg Research accused the Adani group of “brazen” market manipulation and accounting fraud.
Hindenburg’s allegations have raised questions about the financial stability and business handling of the Adani group.
Gautam Adani, who heads a vast empire that now spans from ports and airports to energy, cement and data centers.
As the allegations suggest, the Adani Group artificially inflated the value of its shares through manipulation, and then raised funds by pledging those shares, if the allegations are true banks like SBI could face huge losses in case those share prices fall.
Meanwhile, concerns are also being raised about the safety of savings of millions of Indians in financial institutions such as Life Insurance Corporation (LIC) and State Bank of India (SBI) as they have large exposures to Adani group companies.
After two days of sharp fall in shares of Adani group companies, some of the country’s leading public sector banks said their exposure to the group was within the limits set by the RBI.
The Reserve Bank does not allow more than 25 per cent of the available eligible capital base of the bank to be exposed to any single group of affiliated companies.
“There is nothing worrisome about our exposure to Adani and we have no concerns right now,” SBI Chairman Dinesh Kumar Khara told Reuters.
The Adani group, he said, had not raised any funds from SBI in the recent past and the bank would take a “prudent decision” on any funding request from them in the near future, a Reuters report said.
“Our exposure to the Adani Group is below the Reserve Bank of India’s large exposure framework,” Reuters quoted an unnamed Bank of India executive as saying.
As far as LIC’s exposure to Adani group companies is concerned, ET Now, citing sources, has reported that LIC is not in panic mode and will not sell Adani shares for now. Sources said LIC mainly invests in companies for the long term.
State-controlled life insurer LIC is spending about $37 million as an anchor investor in a new $2.5 billion share sale by Adani Enterprises Ltd, according to a filing. His current holding in the company is 4.23 percent.
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