Global banks considering pausing credit to Adani Group after founder indicted for fraud.

From Investing.com: 2024-11-22 02:30:56

Global banks are considering pausing new credit to India’s Adani Group due to U.S. prosecutors indicting founder Gautam Adani for fraud. Adani and seven others allegedly paid $265 million in bribes for contracts. This is the second crisis for Adani in two years. Adani Group denies the allegations and may face funding challenges for expansion.

Banks are discussing exposure to Adani and its impact on financials. Some Western banks may halt fresh lending until the situation is clearer. Adani firms have stable cash flows but may face challenges in raising capital for expansion due to the indictment. There are concerns about creditor scrutiny and key man risk.

Opposition parties call for investigation into Adani’s dealings with Indian government officials amid the fraud allegations. Prime Minister Modi denies any impropriety. Banks with exposure to Adani may pause lending due to reputational risks. Adani has not commented on the situation or the indictment.

S&P Global Ratings warns that the indictment could affect investor confidence in Adani group entities, potentially impairing funding access and increasing costs. Some banks are reviewing bonds and loans for default risks. Lawyers note that without a conviction, banks may not be able to demand loan repayments. Civil liabilities could arise from potential investor lawsuits.

Adani has not been arrested and extradition to the U.S. would be needed for legal action. Banks with exposure to Adani may face nervousness due to the situation. The process of extradition could be lengthy and uncertain. Risk officers at banks are closely monitoring the situation.



Read more at Investing.com: Global banks weigh halting fresh credit to India’s Adani after U.S. indictment, say sources By Reuters