The Adani Group's woes have gotten real as it has reportedly caught the attention of Indian regulators.
Driving the news: The Reserve Bank of India (RBI) on Thursday, 2 February, has directed banks to lay out their exposure to the Adani Group's companies, The Indian Express reported.
This comes a day after the conglomerate back-pedalled on its Rs 20,000 crore Follow-On Public Offering (FPO)
Reuters reported that the share sale is under scrutiny by SEBI, India's market regulator
A probe by a joint parliamentary committee or a Supreme Court-monitored panel has been demanded by the Congress and other Opposition parties
How it started: The controversy was kicked off by a US short seller, Hindenburg Research, who bet against and accused the Adani Group of accounting fraud, stock market manipulation, and money laundering, among other allegations.
Why it matters: With the Adani Group firms' share prices still tanking, there could ripple effects in the market as shares of other group firms have also reportedly followed suit.
"A significant volume of public money through SBI and LIC is locked in the Adani Group," Congress whip Manickam Tagore said in his adjournment motion.
Banks jittery? Both Credit Suisse and Citigroup's wealth unit have stopped sanctioning margin loans to clients putting up securities of Adani Group firms as collateral.
The total exposure of Punjab National Bank (PNB) to the Adani Group amounts to Rs 7,000 crore
Bank of Baroda's exposure is around Rs 4,000 crore
The exposure of State Bank of India and other banks are not yet known
What they're saying: On the overall impact to India's banking sector, SBI managing director Swaminathan J said, "As is known, most of their acquisitions have been financed through overseas borrowings and market instruments, hence there is no exposure built up to the Indian banking system on this count."
"Despite plunging shares (of Adani Group), LIC purchased firm's shares. Now Central government should tell if employees' money for post-retirement will be snatched away? One report & it collapsed like a pack of cards despite that LIC, SBI money being used that's worrying," Chhattisgarh CM Bhupesh Baghel said on Thursday.
"Presently there is a situation that's emerging and we are not sure what is the factual position...since we are a large investor, we have the right to ask relevant questions and we will definitely engage with them [Adani Group]," LIC Managing Director Raj Kumar had said last week.
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)