Banks have an exposure of Rs 80,000 crore to the Adani group. SBI leads the pack with Rs 27,000 crore exposure. The SBI chairman has said the bank’s loans to the group is 0.88% of its total. Bank of Baroda has an exposure of around Rs 5,500 crore and Punjab National Bank of about Rs 7,000 crore to the Adani group.
Hindenburg Research has said that many of the Adani group’s firms aren’t generating free cash flows that can be used to repay loans.Banks sometimes lend to corporates against pledged securities. In such cases, the steep fall in the share price of Adani group’s 10 listed companies would have also lowered the value of pledged securities. The share price of many banks also fell as investors sold bank stocks concerned about the impact of the crisis on banks’ books.
LIC has said it has exposure of Rs 36,474.78 crore to Adani group’s debt and equity.LIC invested about Rs 300 crore in buying 9,15,748 shares in the now-withdrawn follow-on public offer of Adani Enterprises as an anchor investor. LIC already had a 4.23% stake in the company. The insurer also has stakes in other Adani group companies like a 9.14% stake in Adani Ports and 5.96% in Adani Total Gas.The rout in Adani group stocks would have also brought down the value of investments made by LIC.
SBI and several other banks have said their exposure to the Adani Group is well below the Reserve Bank of India’s (RBI’s) Large Exposure Framework and was secured by cash generating assets. LIC says its exposure to Adani group is less than 1% of its total investments.