Moody's, Fitch say exposure of banks to Adani not big enough to be concerned

Although Adani Group stocks returned to green territory after a two-week rout following the Hindenburg report, it could only trim loss in market value from $118 billion to $115 billion. But the massive crash in the conglomerate's share prices has also raised concerns about the risks to banks who have loaned funds to it. Amidst speculation, top ratings agencies Moody's and Fitch have allayed fears about exposure of banks to the Adani Group.

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Banks won't be hit by Adani's troubles

Even as top three public sector lenders including the State Bank of India have an exposure of Rs 40,000 to Adani, Moody's said that it isn't large enough to hit credit quality. Fitch on the other hand that at 0.8 per cent of the total loan book of all Indian banks, the exposure to Adani was insufficient. Both agencies reiterated the assertion by the Reserve Bank of India and the Minister of Finance, that banks won't be affected by the Adani fiasco.

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Fitch positive about Adani

Moody's, which has warned that Adani may find it difficult to raise debt after the Hindenburg report, also added that banks may be affected if the group increases dependence on borrowings. Fitch on the other hand said that its ratings of Adani's securities remain intact despite the allegations levelled by Hindenburg. It also said that even if the Adani Group is distressed, it won't have an impact on the ratings of banks which are rated based on expectations of sovereign support.

Moody's added that while international investment for Adani will hit by risk perception, quality of corporate loans at Indian banks will remain stable.