RBI seeks details of NBFCs' total credit to Adani Group of companies

The Reserve Bank of India (RBI) on Tuesday sought details of the total credit facilities sanctioned and dispensed by shadow banks to Adani Group of companies.

The granular data sought is on non-banking financial companies’ (NBFCs’) total sanctioned limits and outstanding amount to the group for the third quarter of 2022-23 (FY23), the total contractual inflows coming up by the fourth quarter, and total contractual outflows.

Read together, the RBI’s move — the first after the introduction of scale-based supervision for NBFCs on October 1, 2022, and the first focused on a large group — is a hygiene measure to ensure there are no liquidity worries for NBFCs due to their exposure to Adani Group.

With data received from banks and now NBFCs, the banking regulator seeks to get a complete picture of the overall exposure of its regulated entities to Adani Group.

The latest missive, issued by the central bank’s Department of Supervision, showed its urgency when it asked NBFCs to submit “data on loan exposures to Adani Group companies” by end of the day (Tuesday).

This communiqué has been seen by Business Standard.

This is the third set of data sought by the Department of Supervision in the past 10 days from NBFCs — the first, on large exposures, was on February 21; the second, on loans against shares, on February 24.

“In the case of NBFCs’ exposure in general, they tend to lend to riskier business, and the pricing of credit reflects this,” said an executive at a leading NBFC.

Another person surmised that the RBI is repeatedly seeking information on NBFCs after alignment of its oversight on these entities in the aftermath of blowouts at the Infrastructure Leasing & Financial Services and Dewan Housing Finance Corporation (now known as Piramal Capital & Housing Finance).

The RBI’s moves on NBFCs’ exposure to Adani Group over the past 10 days is the first real attempt to seek data on a major corporate house after it ushered in scale-based supervision for the sector, effective October 1, 2022.

In sharp focus

• Move the first after the introduction of scale-based supervision for NBFCs on October 1, 2022
• This is to ensure there are no liquidity concerns for NBFCs due to their exposure to Adani firms
• Third data-set sought by central bank within 10 days from NBFCs

The regulatory structure for NBFCs now comprises four layers, based on their size, activity, and perceived riskiness — base, middle, and upper layers.

“The top layer is ideally expected to be empty and will be known as NBFC-Top Layer,” the RBI had said.

Top financial industry sources said that the RBI wants to get a sense of the total exposure of all its regulated entities — banks and NBFCs in the main — to Adani Group.

In the early days of the turmoil after the release of US-based short seller Hindenburg Research’s report and meltdown in Adani stocks this month, the central bank had said that “according to 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 guidelines issued by the RBI”.

The banking regulator did not name Adani Group, publicly.

A few leading banks like State Bank of India, Bank of Baroda, Axis Bank, and IndusInd Bank had said that their exposure to Adani Group was within limits and encompassed a small portion of their overall book. So did the state-run insurer —  Life Insurance Corporation of India.