No need to worry about Adani Group’s asset quality: Baroda Bank chief

Mumbai:

Public sector bank Baroda Bank said on Friday it has reduced its exposure to Adani Group entities over the past two years and has no concerns about the group’s asset quality issues.

The bank’s overall exposure to the Port Media Group entity is a quarter of the single group exposure allowed under the Large Exposure Framework (LEF), Sanjiv Chadha, the bank’s managing director and chief executive officer, told reporters. But declined to disclose specific figures.

In LEF, the RBI has stated that the value of all exposures of a bank to a group of related party counterparties shall at no time be higher than 25% of the bank’s available qualifying capital base.

Mr Chadha, who did not disclose the investment amount, said 30 per cent of the bank’s total exposure to Adani group companies was to entities that were in joint ventures with state-run entities, or those exposures were guaranteed by government-owned entities. Overall exposure as a percentage of the balance sheet has declined over the past two years, he said.

Responding to specific questions about Adani Group’s exposure, the bank’s managing director and chief executive said there was “absolutely no problem” from an asset quality perspective, and the group had not made a refinancing request.

Adani Group has had a tough time last week since a short-seller published a report alleging that it was indulging in fraudulent trading and manipulating its share price, making it the biggest scam in the company’s history. The group was forced to cancel its Rs 20,000 crore share sale a day after the successful offering as the share price continued to fall sharply.

Amid a plunge in the share price of Adani Group’s listed entity – the flagship company fell 20% at the open on Friday – Mr Chadha explained that banks provide corporate loans not on the basis of share price but on book value and assets as collateral .

In addition, the majority of loans provided to corporate entities are secured, and working capital loans that constitute the majority of exposure to corporate entities are cash flow secured. Mr Chadha said the bank’s corporate loan book has been performing well, noting that slippage in the December quarter was as low as Rs 130 crore, compared with the hundreds of crore slippage the bank had previously reported.

Advances outstanding for more than 30 days are also low, accounting for just 0.4% of the company’s total book and nearly 44% of total domestic loans.

The bank reported a 75.4% rise in net income to Rs 3,853 crore in the December quarter. BoB shares closed up 6.20 percent at Rs 163.65 apiece on the BSE, while the benchmark index gained 1.52 percent.

(This story was not edited by NDTV staff and was automatically generated from syndicated feeds.)