LIC’s debt exposure to Adani Group cos falls to ₹6,183 crore

Sharing details of LIC’s debt exposure to Adani Group companies, Sitharaman said the state-run insurer has debt exposure of ₹5,388.60 in Adani Ports and SEZ as of 5 March. The exposure in Adani Power (Mundra) was ₹266 crore, Adani Power Maharashtra Ltd-Phase I ( ₹81.60 crore), Adani Power Maharashtra Ltd-Phase III ( ₹254.87 crore), Raigarh Energy Generation Ltd ( ₹45 crore) and Raipur Energen Ltd ( ₹145.67 crore), as per her reply. State-run 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, Sitharaman said.

“As per inputs received from RBI, in order to protect banks from risk, it has implemented large exposure framework which limits exposures that a bank can take to a single counterparty and a group of connected counterparties to 20% (extendable to 25% by board of the bank under exceptional circumstances) and 25%, respectively, of eligible capital base of the bank,” she said.

“Also, 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. To address the concentration risk emanating from large exposure to banking system, RBI has stipulated banks to maintain additional provisions and additional risk-weights on the incremental exposures towards specified borrowers having overall aggregate sanction credit limit of ₹10,000 crore,” Sitharaman said in her reply.

The rout in the Adani Group shares that followed US short seller Hindenburg Research issuing a damning report on 24 January led to LIC’s investments turning negative a week back.The Adani Group has dismissed the charges as lies, saying it complies with all laws and disclosure requirements.