FM: Markets well-regulated; SBI and LIC have assured exposure to Adani Group 'well within permissible limits'

Finance Minister Nirmala Sitharaman offered her first reaction to the rout in Adani Group companies in an exclusive interview interview with Rahul Joshi, Group Editor-In-Chief of Network18. The Finance Minister said both the State Bank of India and Life Insurance Corporation (LIC) have told her that their exposure to the conglomerate is well within permissible limits. She also said both SBI and LIC had issued statements in this regard.

Amidst the current market volatility, the Finance Minister reiterated that India remains well governed with a stable government and a well-regulated financial market.

Talking about the rout in Adani Group stocks, which have lost over half of their market capitalisation since January 24, the Finance Minister said that the regulators are very stringent about governance practices and have kept the country's markets in prime condition.

The minister further said that had the banks been at risk, they would not have been able to raise money from the market, which they are currently doing so comfortably, further adding that the banking sector positioning is very sound.

At the current juncture, the Indian banking system is at a comfortable level with NPAs coming down and recoveries taking place, the minister said during the interview. Brokerage firm Motilal Oswal expects India's top seven PSU banks to report a cumulative net profit in excess of Rs 90,000 crore during the current financial year.

The markets have been in a mode of consolidation. Although their intraday swings have been large, they have remained nearly at the same level as before the Union Budget 2023 announcement. The minister also said that the impact of the Budget would keep taking the market high in the next couple of days.

Adani Group companies have been in the line of fire since a report by short-seller Hindenburg Research sent the group's stocks tumbling lower. Shares of Adani Enterprises, which were down as much as 35 percent during the day, ended 2 percent lower after a dramatic recovery in the second half of the day.

However, shares of other group companies like Total Gas, Green Energy, Power, Transmission and Wilmar continued to end at their lower circuit limits of 5 percent and 10 percent.

Moody's said on Friday that events following Hindenburg's research report might reduce Adani group's ability to raise capital over the next one-two years. However, Fitch sees no material change to Adani Group’s cash flow despite the Hindenburg report.