Finance Minister Nirmala Sitharaman provided a written response to the Lok Sabha stating that the Life Insurance Corporation of India (LIC) had informed the government that, as of December 31, 2022 and March 5, 2023, respectively, its debt exposure to Adani Group firms was Rs 6,347 crore and Rs 6,183 crore. As of March 3, 2023, the total amount owed by LIC to Adani Ports & Special Economic Zone Ltd is Rs 5,388.6 crore. The government made the decision on Saturday not to prolong M R Kumar's tenure as LIC chairman.
According to the minister, five public sector general insurance companies have reported that they have no exposure to Adani enterprises in terms of loans or credit.
After the conglomerate's listed stocks dropped by over 50% as a result of allegations of fraud made against it by US short seller Hindenburg Research, LIC's investments in Adani enterprises have been the subject of severe investigation.
The minister also addressed a query about whether various banks have evaluated the risks associated with recovering loans from or having credit exposure to Adani Group companies.
"Public sector banks have informed that loans are sanctioned after assessing the viability of projects, prospective cash flows, risk factors and availability of adequate security and repayment of loans are ensured by the revenue generated by the project and not by the market capitalization of the company," the minister said in her reply.
According to feedback from RBI, it has implemented a large exposure framework to protect banks from risk, which caps the exposures that a bank can take to a single counterparty and a group of connected counterparties at 20% (which may be increased to 25% by the bank's board in exceptional circumstances) and 25%, respectively, of the bank's eligible capital base.