Just days after the Hindenburg vs Adani crisis unfolded, the Reserve Bank of India (RBI) is now reportedly keeping an eye on top 20 conglomerates - conglomerates that have the largest exposure from the banks. As per updates, the RBI is doing this to identify any potential risks in the future.
According to a report in The Economic Times, along with the profitability of these business firms, the RBI is also on the look out for other financial performance measures like the quanity of loans raised from places like external commercial borrowings or bonds. As per experts, the hightened monitoring is usually done along with the routine evaluation of important financial intermediaries and the Central Repository of Information on Large Credits (CRILC).
“A deep dive is undertaken into the data and information available to study their business models and loan portfolio along with various performance parameters,” The Economic Times quoted a source familiar with the matter, as saying.
The central bank which also works as a regulator for banking sector also issued a statement regarding the monitoring of banks. This comes after the Hindenburg Research published a report which alleged Adani Group of several wrongdoings like fraud, stock-price manipulation and illegal use of off-shore tax havens.
As per the statement issued by the RBI on February 3, “There have been media reports expressing concern about the exposures of Indian banks to a business conglomerate.” It adds, “The RBI has a Central Repository of Information on Large Credits database system where the banks report their exposure of Rs 5 crore and above which is used for monitoring purposes.”
The report adds that after a number of bank frauds and the IL&FS default, the banking regulator established a distinct vertical for supervision and regulation in 2019. This is to increase survelliance of banks and non-banking financing firms.
Moreover, the RBI has established Platform for Regulated Entities for Integrated Supervision and Monitoring, an end-to-end workflow automation system for improving compliance of supervised entities (SEs).