New Delhi: The Finance Ministry on Monday refused to disclose the details of loan and credit exposure of public sector banks to the Adani Group citing the Reserve Bank of India Act, 1934.
Replying to questions raised over the issue, Union Finance Minister Nirmala Sitharaman stated in a written reply that as per section 45E of the Reserve Bank of India Act, 1934, RBI is prohibited from disclosing credit information. "Section 45E provides that credit information submitted by a bank shall be treated as confidential and not to be published or otherwise disclosed," stated Sitharaman.
As for the loan /credit exposure of public sector insurance companies to the Adani Group, the Finance Minister stated that according to the Life Insurance Corporation of India (LIC) that its debt exposure to Adani Group of Companies was Rs 6,347.32 crore and Rs 6,182.64 crore, as on December 31, 2022, and March 5, 2023, respectively. "The five Public Sector General Insurance companies have informed that these companies do not have loan/credit exposure to Adani Group of Companies," she added.
Asked whether various banks have assessed the risks involved in the recovery of loans/credit exposure to Adani group of companies, the Finance Minister stated that Public Sector Banks have informed that loans are sanctioned after assessing the viability of projects, prospective cash flows, risk factors and availability of adequate security and repayment of loans are ensured by the revenue generated by the project and not by the market capitalisation of the company.
"As per inputs received from RBI, in order to protect banks from risk, it has implemented large exposure framework which limits the exposures that a bank can take to a single counterparty and a group of connected counterparties to 20 per cent (extendable to 25 per cent by the Board of the bank under exceptional circumstances) and 25 per cent, respectively, of the eligible capital base of the bank," added Sitharaman.
She pointed out that as per RBI guidelines, banks are required to have a clear policy regarding the Debt-Equity Ratio for project financing to ensure that promoters bring in equity funds proportionate to bank finance.
