In response to news that Credit Suisse no longer accepts Adani firms’ bonds as collateral for margin loans. Adani Enterprises experienced an approximate 26 percent decline, closing at Rs 2,180.20 per share. Adani Ports, a different group stock, too experienced a 20% decline in price and closed at $492.15 per share. Ambuja Cements’ 16.56 percent drop to close at Rs 334.60 and ACC’s 5.96 percent drop. They close at Rs 1,852 which contributed to the group’s additional decline.
Despite the success of yesterday’s follow-on public offering (FPO) of Rs 20,000 crore by the group’s flagship Adani Enterprises. The majority of equities fell on February 1 as concerns over stock volatility persisted.
How did it all start?
Adani Group’s stock took a beating last week after Hindenburg Research accused it of utilizing tax havens and raised financial issues in a report. The group refuted all allegations in a 413-page response.
According to a Bloomberg story, the Group has maintained its collateral coverage on a $1 billion loan. It is by putting up millions of dollars’ worth of shares despite the stock market crash.
The Group further added around $300 million worth of shares on January 27. Therefore, in exchange for a loan provided by a number of banks.
RBI gets in to investigate banks’ exposure to Adani:
In light of the continued decline in the shares of group firms and the cancellation of the follow-on public offer of Rs 20,000 crore, the Reserve Bank of India (RBI) has requested information from banks regarding their exposure to Adani group companies.
An RBI representative who was approached declined to comment on the situation. Following Credit Suisse’s decision to discontinue accepting bonds issued by Adani Group firms as collateral for margin loans to its private banking clients, Citigroup’s wealth unit has also stopped offering its clients margin loans secured by securities issued by Group companies. A banking source speculated that this may have spurred the regulator to intervene.
Punjab National Bank (PNB) stated that its entire exposure to the Adani Group of Rs 7,000 crore is supported by acceptable cash flows and that there is currently no concern regarding repayments. State Bank of India (SBI) has not yet disclosed its position.
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