NEW DELHI: India’s Union finance minister Nirmala Sitharaman said on Saturday that Adani Group's withdrawal of its Follow on Public Offer (FPO) will have no affect on the Indian economy's image or macroeconomic fundamentals, reports the Times of India.
Foreign Exchange Reserve in the last two days has gone up by US$8 billion. Neither our macroeconomic fundamentals nor our economy's image have been affected, said the FM during a press conference on the recent pullout of the Adani Group from its Rs 20,000 crore FPO.
How many times have FPOs withdrawn from this country and how many times has the image of India suffered because of that, and how many times have the FPOs not come back said the FM while reiterating that exposure of banks, financial institutions to Adani Group was well within the limit.
It will be regulators who will do their job. The RBI has made a statement, prior to that banks and LIC came out and informed about their exposure (to Adani group). Regulators independent of the government will do what is appropriate ... so market is well regulated. The SEBI is the authority and it has the wherewithal to keep that prime condition intact, she added.
On Friday, the finance minister had echoed similar sentiments stating that India has a stable government with a very well-regulated financial market.
As a result, investor confidence, which existed before, shall continue even now. Our regulators are normally very-very stringent about governance practices and therefore, one instance, however much talked about globally it may be, is not going to be indicative of how well financial markets are governed, the FM had said.
Meanwhile, finance secretary TV Somanathan stood by his recent remarks that the stock market turmoil created by rout in Adani Group shares is a storm in a tea cup from a macroeconomic point of view.
The senior most bureaucrat in the finance ministry had highlighted that India's public financial system was robust. He added that movements in the stock market per se were not the government's concern and there are independent regulators to take necessary action.
He assured there was no cause for concern for depositors, policy holders or investors in any nationalised bank or insurance company due to their exposures in Adani group companies.
After Hindenburg Research's shocking report alleging misuse of tax havens, massive fraud, stock manipulation and high debt levels, the Adani Group has been under increasing scrutiny with many questions arising over its business performance as investors' faith has been dangling.
Due to the carnage in Adani stocks, Gautam Adani who was among the top five billionaires in the world, witnessed a massive downfall in his wealth. As of February 4, the Bloomberg Billionaires Index lists Adani at number 21 with a net worth of US$59 billion -- an year-to-date decrease of a whopping US$61 billion.
On Friday, the Reserve Bank of India (RBI) had issued its first statement on the issue to state that the banking system was stable, and lenders were in compliance with the large exposure framework guidelines, which cap lending to a single business group.
Without naming Adani, the regulator said that it has maintained a constant vigil on the banking sector and on individual banks to maintain financial stability. The central bank said it constantly monitors data on bank exposure to large corporations. As per the RBI’s current assessment, the banking sector remains resilient and stable. Various parameters relating to capital adequacy, asset quality, liquidity, provision coverage and profitability are healthy. Banks are also in compliance with the Large Exposure Framework (LEF) guidelines issued by the RBI, the statement read.