IDFC First Bank jumps over 5% after clarification on exposure to Adani group companies

Shares of IDFC First Bank jumped over 5% after the lender issued a clarification regarding exposure to Adani Group companies.

IDFC First Bank said the funded outstanding to Adani Group companies is only 0.06% of the funded assets as of December 2022. The bank has been receiving payments as per the quarterly amortization payment schedule for the same.

The stock was last trading 3.81% higher at Rs 58.60 apiece on NSE.


The lender has a working capital outstanding of only 0.51% of the funded assets as of December 2022 of which the majority, at 0.38%, is a secured letter of credit which will mature in the next 2-5 months.

"The balance, at only 0.13%, has a maturity of 1-2 years. The underlying companies have strong cash flows and operating models, and we are comfortable with the exposure," IDFC First Bank informed the exchanges.

The bank further clarified it does not have any exposure to any offshore entities in Adani Group or against the shares of the Adani Group companies.

The lender said it will continue to reduce concentration risk, and has brought down exposure to top 10 group borrowers from 17% in March 2019 to 8% in December 2022 and that it will continue to do so.

Amid concerns around debt to Adani group companies, the Reserve Bank of India has asked the banks for details of their exposure, Reuters reported, citing sources.

Information being sought by the RBI includes details of collateral being used to back loans and any indirect exposure banks may have. Nifty Bank index has lost 5.4% since the New York-based short-seller Hindenburg released its report.

However, Societe Generale, in a report, said the Indian banking sector's direct exposure to the Adani group was just 0.6%. It said markets are "overpricing" the risk to Indian lenders of their exposure to the Adani Group and that a selloff in banking shares seemed overdone.

Adani Group companies extended the selloff to the sixth day after a report by Hindenburg warned of high leverage and fraudulent practices in group companies. Global bankers Citigroup and Credit Suisse stopped accepting securities of Adani companies as collateral for margin loans.

Given the turbulent market, Gautam Adani shelved Rs 20,000 crore FPO, citing the need to insulate investors from potential losses.