Mumbai: Domestic banks’ exposure to the Adani Group is “not very significant”, and the system is strong and large enough to not get impacted by a single case, the Reserve Bank said on Wednesday.
Replying to a specific question on whether the RBI will give any guidance to lenders on their exposures to the Adani group, given certain flags raised by rating agencies, Deputy Governor MK Jain said the domestic banks’ exposures are “not very significant” and termed the exposures against shares as “insignificant”.”Our domestic banks’ exposure is against the underlying assets, the operating cash flows and the projects under implementation. And not based on the market capitalisation,” Jain said while speaking to reporters at the customary post-policy review press conference.Further adding on the company, Governor Shaktikanta Das said that Indian banking sector, including NBFCs, continues to be resilient, strong, adding that RBI has made an assessment of lenders’ exposure to Adani group firms; large exposure guidelines have been complied with by all banks.He added that the strength, size and resilience of the Indian banking system now are much stronger and larger “to be affected by a case like this” in reference to the developments at Adani Group.
He was responding to a query on whether the RBI will be giving any guidance to domestic banks about their exposure to the Adani Group companies in the context of rating agencies’ reports related to banks’ exposure to the Group.
Briefing reporters after the monetary policy announcement, Das said that when banks do lend, they take their calls on the fundamentals of a company and the expected cash flows from projects.
Earlier on 3 February, without naming the company in the statement, the Reserve Bank had said India’s banking sector is resilient and stable, and the central bank maintains constant vigil on the lenders.
