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India’s Bank of Baroda says open to lending group

February 07, 2023

India’s Bank of Baroda says open to lending group
India’s Bank of Baroda is open to lending to the Adani Group going forward, provided the embattled conglomerate meets all of the bank’s underwriting criteria, a top executive at the state-run lender said on Monday.

Investors have been worried about various banks’ exposure to the Adani Group ever since U.S.-based short-seller Hindenburg Research alleged improper use of offshore tax havens and stock manipulation by the conglomerate.

The State Bank of India, IndusInd Bank, Punjab National Bank have all tried to allay concerns regarding their exposure to group, while the Reserve Bank of India (RBI) has said that the Indian banking system remains resilient and stable.

On Monday, Bank of Baroda’s managing director told Reuters that the lender’s outstanding exposure to the group was less than one-fourth of the amount permitted by the central bank for conglomerates, which allows for no more than 25% of a bank’s available eligible capital base to be exposed to any one group of connected companies.

A large percentage of this was towards companies having “very strong” cash flows, limiting any downside to asset quality, Sanjiv Chadha, MD of India’s second largest state-run bank by assets, said.

“There is nothing that should really concern us,” Chadha said, adding that having top-most underwriting standards was high on the lender’s order of priority.

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