Finance Secretary TV Somanathan on Friday allayed concerns about domestic financial institutions, including banks and insurance companies, in the wake of the Adani-Hindenburg episode which entails exposure of the nation’s largest insurer, Life Insurance Corporation of India and the State Bank of India.
In an interview to businessline, without naming any of the Adani companies, the Finance Secretary said the exposure of public financial institutions is “miniscule” in terms of the size of these institutions.
“As far as the stability of financial institutions, there is absolutely no cause for concern whether it is for banks or insurance companies or if it is for depositors or investors in these institutions...,” he said.
Last week, LIC had clarified that its total holding in Adani companies, including equity and debt, was ₹35,917.31 crore as of end-December 2022 and as on date, it is ₹36,474.78 crore. These investments have, however, been made over a period of time. The insurance behemoth’s total assets under management (AUM) exceeded ₹41.66-lakh crore as on September 30, 2022. Therefore, LIC’s exposure to the Adani group is 0.975 per cent of its total AUM at book value, it had said.
On Friday, SBI said its overall exposure to the Adani Group is 0.88 per cent of the book or around ₹27,000 crore. The bank does not envisage the group facing any challenge to service its debt obligations, said Dinesh Khara, Chairman, and stressed that SBI has not given any loans against shares to the group.
When asked about the impact of panic selling being witnessed in the stock market, Somanathan said the market is inherently unstable where prices fluctuate frequently. “That is a matter between an individual private sector company and its investors, analysts, regulator... it is for that set of participants in that market to sort out. It’s not something that the government can or even should worry about,” he said.
Simultaneously, the Finance Secretary was categorical that public financial institutions will not be affected by this and the effect is “too small” to cause any kind of difficulty. “Our financial institutions in the public sector are very stable, they are very safe and they are absolutely fine. This is not even a blip in their finances,” he said.