Uday Kotak on Adani-Hindenburg fiasco: 'Don't see systemic risk to Indian financial system'

Uday Kotak, Managing Director of Kotak Mahindra Bank poses for a picture at the company's corporate office in Mumbai

Days after financial contagion spread in India after Adani Group's crisis worsened, Uday Kotak has said that he does not see a systemic risk to the Indian financial system.

The chairman of the Kotak Mahindra Bank alluded to the Adani Group turmoil in a tweet on February 5 noting that he does not see systemic risk to Indian financial system from recent events.  However, large Indian corporates rely more on global sources for debt and equity finance, he added.

''This creates challenges and vulnerabilities. Time to further strengthen Indian underwriting and capacity building,'' Kotak noted.

I do not see systemic risk to Indian financial system from recent events. However,large Indian corporates rely more on global sources for debt and equity finance. This creates challenges and vulnerabilities. Time to further strengthen Indian underwriting and capacity building.

— Uday Kotak (@udaykotak) February 5, 2023

The market value of Adani Group companies plunge by almost half since the report was released. The plunge sparked concerns about spillover into the broader financial system. Adani's seven listed firms have lost about half their market value, totalling more than $100 billion since the Hindenburg report.

Amid the rout in Adani Group stocks, market regulator SEBI on February 4 jumped to ward off further damage to the market and said it has observed unusual price movement in the shares of a conglomerate, referring to the embattled Adani group.

SEBI said in all specific entity-related matters, if any information comes to its notice, it will be examined and after due examination, appropriate action will be taken.

A day earlier, the RBI had said the banking sector remains resilient and stable, ending speculation of the potential risk to lenders from their exposure to the crisis-ridden group.

Meanwhile, the ministry of corporate affairs has started a preliminary review of Adani Group's financial statements and other regulatory submissions made over the years, two senior government officials told Reuters on February 3.

The new ministry inspection process was initiated on Thursday (February 2), one of the government sources said, saying it was under "Section 206" of India's Companies Act under which the government reviews financial documents submitted over the years, such as balance sheets, books of accounts or ledgers.