“Adani saga possess no systemic risk to Indian financial institutions, SEBI is competent to handle the crisis”: Adani’ s Hidenburg incident seen in a new light
Hindenburg’s report, which was unknown among the people, has gained momentum as the New York short seller group was able to bring down one the wealthiest man in Asia- Gautam Adani, and the enterprises he hoards questioning the legitimacy of the firm.
“No systematic risk to the financial institutions,” says Uday Kotak:
Amidst the controversy of the damaging report by the Hindenburg group, industrialist and banker, Uday Kotak has opined his perspective on Adani’s situation. He has mentioned that he does not predict any systematic risk events. Furthermore, large Indian corporates depend on global sources for debt and equity finance.
In addition, he has stated that dependence often creates risks and vulnerabilities. And it is high time for India to strengthen its capacity and investments.
Gautam Adani’s firm has been impacted drastically by the Hindenburg report. Adani’s business has suffered dramatically as a result of the short-seller. He lost his position as the world’s richest man and now ranks No. 21 on the Bloomberg Billionaires Index.
Adani’s Enterprises has eight of the ten worst-performing stocks. The group has suffered, like the banks which provided loans to the businesses so they could continue to operate. Since the publication of the Hindenburg report, the State Bank of India has experienced an 11% decline.
It may have an impact on the Indian market. Foreign investors became interested in Indian stocks as a result of the unfavorable press the Adani-related headlines received. Due to the stock market meltdown, investors have incurred massive losses. Market capitalization for the company has fallen to below ten lakh crore INR.
Previously, the RBI has asked the banks for information about their exposures with the Adani group and has shared concerns about it. RBI has mentioned that being a banking sector regulator, it maintains vigilance with the banks to attain financial stability. Various other parameters are considered to measure the banking sector’s strength, like capital adequacy, quality of assets, coverage, and many other factors. And, the banking sector is healthy at present.
Indian regulators are competent to handle the Adani-Hindenburg crisis: Piyush Goyal
While the opposition party has demanded to set up a joint Parliamentary Committee to take Adani’s case into account. Sanjay Singh, a member of the Aam Aadmi Party, claimed that Adani’s meteoric climb to wealth was based on mountains of lies and frauds. This statement has been denounced by other opposition groups. As the occurrence has caused embarrassment and called into doubt the reliability of Indian institutions, the prime minister should respond without delay.
Union Minister for Commerce and Industry, Piyush Goyal has finally replied to the accusations stating that the regulators are competent to handle the situation and will take the action against Adani Enterprises that have caused a massive stock crash.
Furthermore, he regarded the situation as “Unfortunate” during the opposition party questioned the authority to take charge.
Piyush Goyal has reported to valid sources stating that the regulators in India are competent and India’s financial markets are among the most respected markets in India. The stock crash has resulted in the loss of the share market’s valuation and not on any individual’s wealth.
When the opposition condemned the ruling party for maintaining silence about the subject and for a loss of 100 billion USD, he stated that it is a given rule of investment, investments in shares and stocks fluctuate, but no Indians have lost their money in the severe volatility.
Piyush Goyal has added that the financial institutions have stated their funding is secured and safe, asserting the two principal organizations, LIC and SBI.
It is a matter of a private company, which has been brought under the limelight by the allegations made by a foreign company. It is strictly up to the regulators to take action based on it.
When he was asked about the opposition’s accusations stating that the SEBI is not taking any action, he replied that SEBI is an autonomous institution that operates independently. He has denied the opposition’s claims stating that the Parliament is a place to discuss and debate about governmental policies. They should discuss the propositions made by the government rather than stalling the parliament.
SEBI has reassured the investors that the market was safe and protected from volatility after the share rout by the Adani group.
They have announced that India’s financial markets have showcased ongoing stability and are continuing to operate fairly, transparently, and efficiently.
Indian Finance Minister Nirmala Sitharaman has stated that the Indian markets are well-regulated and any controversy can not affect the investors’ confidence.
The assertions were necessary to bring the investors and the Indian market in an optimistic approach It is crucial at a time, when dominant banks, like Credit Suisse and CitiGroup, have stopped accepting Adani bonds as collateral for giving loans to private companies.
edited and proofread by nikita sharma