[ad_1]
When contacted, an RBI official declined to comment on the development. After Credit Suisse stopped accepting bonds of Adani Group companies as collateral for margin loans to its private banking clients, Citigroup’s wealth unit has stopped extending margin loans to its clients against securities of Adani group companies. “This might have prompted the regulator to step in,” said a banking source.
Market regulator SEBI has not announced any probe into the crash in Adani shares and the withdrawal of Rs 20,000 crore FPO.
The Adani group has a consolidated debt of over Rs 2 lakh crore. Bloomberg, which had reported on Wednesday that Credit Suisse Group AG had stopped accepting bonds of Adani Group companies as collateral, said in another report on Thursday that Citigroup Inc’s wealth arm had stopped accepting securities of Addani Group of firms as collateral for margin loans.
While State Bank of India (SBI) is yet to disclose its exposure, Punjab National Bank (PNB) said its total exposure to the Adani Group of Rs 7,000 crore is backed by adequate cash flows and there is no worry on repayments at present. The lender has a fund-based exposure of Rs 6,300 crore and a non-fund exposure of Rs 700 crore to various companies of the Group, the bank’s managing director and CEO A K Goel said.
Bank of Baroda has an exposure of Rs 4,000 crore. Other banks have not yet disclosed their exposure. SBI’s exposure to the Adani Group is well below the Large Exposure Framework (LEF) of the RBI and is secured by cash generating assets with adequate TRA (trust and retention account) / Escrow mechanism in place, debt service will not be a challenge, SBI said.
Last week, Swaminathan J, Managing Director (corporate banking & subsidiaries), SBI, had said the Indian banking system’s exposure to the group as a percentage to their total debt has been declining over the last two-three years. During the same period, their debt to EBITDA (earnings before interest, taxes, depreciation, and amortization) also has been getting better, which helps the group to service its obligations comfortably.
“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,” Swaminathan said.
According to a report by investment firm CLSA, the top five Adani group companies — Adani Enterprises, Adani Ports, Adani Power, Adani Green and Adani Transmission — have a consolidated debt of Rs 2.1 lakh crore. Indian banks’ exposure is less than 40 per cent of the total group debt. Within this, private banks’ exposure is below 10 per cent of total group debt.
The CLSA report estimates that banking exposure to Adani Group is 0.55 per cent of system loans as bank debt stands at less than 40 per cent of total group borrowing.
Within this, PSU banks’ exposure as a share of their loans is 0.7 per cent, with the figures for some banks potentially at more than 1 per cent of loans, while for private banks the exposure is 0.3 per cent of loans, CLSA said.
[ad_2]
Source link