Indian Banking System Won’t Be Affected By “Case Like This”: RBI Chief On Adani Row

Bombay:

Reserve Bank Governor Shaktikanta Das said on Wednesday that the strength, size and resilience of India’s banking system are now much stronger and greater “to be affected by a case like this,” referring to developments at Adani Group.

Concerns about Adani Group companies have been raised in various quarters, including lenders’ exposure to the conglomerate, following a negative report from US-based shortseller Hindenburg Research, which also led to a massive sell-off of the shares of the companies.

When asked about the Adani Group, Mr. Das said the Reserve Bank of India (RBI) made its own assessment to release the statement on Friday in which it labeled the banking sector as strong and resilient.

“The strength, size and resilience of the Indian banking system is now much stronger and greater to be affected by a case like this,” Das said without directly commenting on the Adani Group.

He was responding to a question whether the RBI will provide domestic banks with any guidance on their exposure to the Adani Group companies in the context of reports from rating agencies regarding banks’ exposure to the Group.

In a briefing to reporters following the monetary policy announcement, Mr. That’s when banks borrow money, they answer their question about the fundamentals of a company and the expected cash flows from projects.

He also made it clear that the company’s market capitalization does not play a role there.

Deputy Governor MK Jain said domestic bank exposure is “not very significant” for the Adani Group and equity exposure is “insignificant”.

Meanwhile, Mr. Das indicates that the assessment methods of the banks have improved greatly over the years.

Over the past three to four years, the RBI has taken several steps to strengthen banks’ resilience, including guidance on governance, audit committees and risk management committees, making it mandatory to appoint chief risk officers and chief compliance officers.

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