The government has requested the country’s state-owned banks to implement greater monitoring of top corporate loan accounts and to present a strategy to deal with business risks in critical sectors within two weeks.
At a time when increasing interest rates are harming banks all over the world, the government has directed the country’s public lenders to conduct more stringent oversight of top corporate lending accounts.
Companies have also been requested to produce a plan to deal with business risks in critical sectors within two weeks, according to three banking sources quoted by Reuters.
“Bankers were told that it would be prudent to increase stress-testing of large corporate loan accounts,” a banker quoted in the paper claimed.
According to the sources, they have also been asked to watch the mark-to-market impact on their trading books as interest rates rise and to preserve their liquidity ratios.
It should be recalled that finance ministry officials met with chief executives of state-owned banks on Saturday, and the lenders were urged to identify stress spots, such as concentration concerns and unfavourable exposures. This was according to a government statement.
According to another banker, lenders were also instructed to enhance the frequency with which they assessed their asset-liability profiles in the midst of global financial volatility.
The government’s directive to public lenders follows the ongoing global financial upheaval caused by the failure of a few US regional banks. Yesterday, Reuters reported that the government has requested information about these banks’ bond portfolios as a precautionary step.
Nonetheless, the government, as well as the Reserve Bank of India, have said unequivocally that the Indian banking system remains robust and resilient, and that lenders have constructed adequate buffers to protect themselves in the case of an emergency.
Similarly, The Economic Times reported that the Adani Group has attempted to renegotiate the conditions of $4 billion in outstanding loans received in August last year for the acquisition of cement businesses ACC and Ambuja Cements from Holcim Group.
The massive drop in Adani Group equities today comes nearly two months after Gautam Adani’s power-to-ports conglomerate was slammed in a damning report issued by American short seller Hindenburg Research.
Adani Group’s market capitalization has been declining for more than a month as it has failed to reassure investors. Ultimately, the group’s price rebounded when it held roadshows to persuade its worldwide investors and stakeholders, aggressively liquidated debts, and sold interests worth Rs 15,000 crore to GQG Partners, a US-based boutique investment company.
