NEW DELHI: Finance Minister Nirmala Sitharaman has said that public sector lenders have made it clear that their exposure to Adani Group is within permissible limits and the macro-economic analysis would show that Indian banks are placed comfortably.
In an interview with Rahul Joshi, Editor-In-Chief, Network18, the Finance Minister also said that regulators are stringent about governance practices and have kept the markets in ‘prime and prim’ condition.
This is the first time the Finance Minister has responded on the Hindenburg-Adani row about the Indian lenders’ exposure levels to the conglomerate.
Following Hindenburg research report, there have been concerns about banks’ exposure to the group with opposition parties seeking to raise the issue in Parliament.
Sitharaman said India remains a well-governed, stable government and also very well-regulated financial market and expressed confidence that the investor confidence which existed before shall continue.
Sitharaman said that State Bank of India and Life Insurance Corporation have stated that they are not overexposed to the Adani Group.
“I want to recall the words…the words coming from the horse’s mouth has greater credibility. Both SBI and LIC have issued detailed statements, the chairperson has himself come out and explained how they are not overexposed or whatever they said and also said, look, we are sitting over profits for the exposure that they have which is well within the limits, that’s what I understand they have said and have read it through the media,” the minister said.
“They have very clearly said that their exposure is very well within the permitted limits and that they are even now with a valuation falling as well, they are still sitting over profits. So if that is the word from the horse’s mouth…but in general both with the RBI, we do have the Financial Stability Board’s meeting which happens once in six months. We meet, even recently we have met,” she added.
She said RBI continues to monitor the stability of banking sector.
“I can only very clearly say both the RBI and we, because of the FSB’s meeting know that the Indian banking system at this stage for me to use this word, I want to use this word with a sense of responsibility, like having gone through the twin balance sheet problem, the Indian banking sector today is at a comfortable level with their NPAs coming down to absolutely low levels, recoveries happening and their position is very sound, which gets reflected in the fact that when they go to raise monies in the market, they are absolutely comfortably raising money as well. So the entire macro-economic analysis which any expert would do also highlights the fact that how comfortable the Indian banks are placed. That cannot be that if they are at risk,” Sitharaman said.
The minister was responding to a query about the opposition targeting the government and stating that banking and insurance companies have large exposure in Adani’s stock about some directions broader markets may be looking to.
The opposition parties have forced adjournments in both Lok Sabha and Rajya Sabha over their demands concerning Hindenburg-Adani row. They have sought discussion over investment by LIC, Public Sector Banks, and financial institutions “in companies losing market value, endangering the savings of crores of Indians” following a report by a US-based short seller Hidenburg Research which has made allegations against some companies of Adani group.
Answering a query on the Union Budget and nervousness in market due to impact of Adani stock, the minister said the budget has covered all the sections of society.
“It has been a detailing which has consumed a lot of time in preparation of this budget. The details is what has bought the difference, touching so many different sectors and segments of our society…So, therefore, if it’s being received very well, I am glad, but, of course that motivates me to be able to now take it upon myself to better implement it down to the last person who was aimed at. So I would think that the impact of the budget, the immediate impact of the budget on the market and subsequent to, let’s say, for what were reasons it trade back, I think in the next few days the budget’s impact will still continue to hold the market size,” she said.
The Union Budget was presented on February 1.
Asked about some global investors as immediate reactions seem to have pulled out some money in the last couple of days, the minister said India remains a very well-regulated financial market.
“And as a result, I think the investors’ confidence which existed before shall continue even now. Our regulators are normally very,very stringent about certain governance practices, and therefore, there should one instance….however, much talked about globally may be, I would think is not going to be indicative of how well financial Indian markets are governed. So many lessons have been learnt over the decades and, therefore, I think our regulators have kept the market well in prime and prim condition,” she said.
Asked if the current recoveries were due to pent up demand or they will sustain, the minister said pent-up demand won’t stretch itself for more than one season.
“I think it will be sustained because the pent-up demand argument was very right nearly 4-5 quarters ago when post the Omicron we were coming back. People thought the 2022 festival season was driven by revenge shopping, pent up demand and so on. Pent-up demand won’t stretch itself for more than one season if you want to take it that way,” she said. (ANI)