Banks' exposure to Adani group 'insufficient', face limited risk: Fitch

Indian banks' exposure to Adani group is "insufficient in itself" to pose a substantial risk to their credit profiles, Fitch Ratings said on Tuesday.

Adani group has faced stock rout and questions after a US short seller Hindenburg Research came out with a damning report alleging financial and accounting fraud by the ports-to-energy conglomerate. Adani Group has denied all charges and threatened to sue Hindenburg.

"Fitch Ratings believes that Indian banks' exposure to the Adani group is insufficient in itself to present a substantial risk to the banks' standalone credit profiles," the rating agency said in a note.

Ratings of banks remain driven by expectations that the banks would receive extraordinary sovereign support if needed.

Fitch on February 3 stated that the controversy over the short-seller report had no immediate impact on the ratings of Fitch-rated Adani entities and their securities.

"Even under a hypothetical scenario where the wider Adani group enters distress, exposure for Indian banks should, in itself, be manageable without adverse consequences on the banks' viability ratings," Fitch said.

State Bank of India last week stated that its share of the group's loans had fallen to 31 per cent by 2022-end from 55 per cent in 2016.