MC Exclusive | No reason why UCO bank should not lend to Adani group, says MD & CEO

Soma Sankara Prasad-CEO-UCO bank

UCO Bank will continue to lend to Adani group provided it judges projects to be commercially viable, Managing Director and Chief Executive Officer Soma Sankara Prasad said on April 3.

"I mean, there's no reason why if it's a commercially viable proposition we should not be lending to the group,” Prasad said in an exclusive interview to Moneycontrol.

Adani group companies have faced a heavy sell-off in the stock market after a short-seller report in January 2023 questioned the accounting practices and valuations of Adani group companies.

Hindenburg Research said it holds short positions in Adani group through US-traded bonds and non-Indian-traded derivative instruments.

Lenders to Adani group have faced questions on the future of their loans and repayment status. Five banks, which include some of the biggest public and private sector players, have so far disclosed their exposure to the Adani Group.

UCO Bank’s Prasad said that when it comes to extending new loans to the group, the bank would look at the project from a viability point of view, whether all the tie-ups are in place, debt and equity has been finalised and what kind of demand exists for the product or service it wants to sell.

"If you look at our loan portfolio, if I take a loan portfolio of Rs 150,000 crore, my exposure to the Adani group is less than Rs 1,100 crores, that is less than 1 percent of my total advances, and all these loans have been given to infrastructure projects, which have already been completed and which are generating good cash flows," said Prasad.

The MD & CEO noted that the group had solid assets on the ground. "We are getting our repayments regularly. So, there is no worry as far as those exposures are concerned," he said.

Other banks’ position

Bank of Baroda MD and CEO Sanjiv Chadha told Moneycontrol earlier that his bank would continue to lend to the Adani group if the account met the lender's underwriting criteria.

State Bank of India’s (SBI) Chairman Dinesh Khara on February 3 said the lender’s exposure to the Adani group was around Rs 27,000 crore, or 0.8 to 0.9 percent of its loan book and repayments were on track, implying there had been no cause for concern yet.

“We have lent to Adani for projects which have tangible assets and have adequate cash collections. They are able to meet obligations. It is only 0.8-0.9 percent of our loan book,” Khara said at a press conference after announcing the bank's third-quarter results.

State-run Punjab National Bank (PNB) is keeping a close watch on developments pertaining to the Adani group, MD and CEO Atul Kumar Goel told Moneycontrol on February 24.

The Reserve Bank of India (RBI) is looking into the details of banks' exposure to Adani group companies and has sought the present status of these loans, people familiar with the matter told Moneycontrol.

The RBI has already reached out to some of the major banks that are lenders to the group and is engaging with them to verify details of their exposure, one of the persons said.