‘Issues afflicting Adani more valuations related’

MUMBAI: Private sector lender Kotak Mahindra Bank has a “small exposure” to Adani group which has been made in line with its credit philosophy, a senior official has said.

Paritosh Kashyap, president and head for wholesale banking at Kotak Mahindra Bank, said the issues surrounding Adani Group are more of a “capital market and valuations issue and not a credit issue.””We have a small exposure to the group. We do business with every corporate in the country, and our exposures are in line with our credit philosophy and size of our balance sheet,” Kashyap told PTI in an interaction.

He said operating companies in the group have “reasonable leverage”, coupled with strong profitability and balance sheets.

It can be noted that a report by the US short-seller had called Adani as the biggest con in corporate history, making wide-ranging allegations on governance practices among other aspects to say that the stocks are overvalued by 85%. The publishing of the report in late January led to a rout in Adani group’s listed entities, and also made investors nervous about banks initially as they feared a ripple effect to play out on the banks who have exposure to the group. The RBI has launched a special examination of the banking system’s exposures to Adani Group entities, and Governor Shaktikanta Das has said that a single case cannot impact the broader banking system. According to experts, the Indian banks’ exposures are to operative companies and not against shares at the listed holding company level. This is so because in most of the cases barring asset buys by infrastructure companies, Indian banks are not allowed to lend more than ₹20 lakh as loans against shares, which has come in as a helpful regulatory mandate.

MINT Kotak Mahindra Bank has a “small exposure” to Adani group, the lender said.