Regulators monitoring Adani-Hindenburg crisis, FPO pullout hardly impacted economy: Sitharaman
What's the story
Union Finance Minister Nirmala Sitharaman on Saturday said that market regulators are independently monitoring the crisis around Adani Group, which is facing allegations of stock manipulation and accounting fraud. Addressing a post-budget presser, she said that the follow-on public offer (FPO) pullout by Adani Enterprises had little impact on the Indian economy as the country's foreign exchange reserve was increased by eight billion recently.
Context
Why does this story matter?
Hindenburg Research's report accused Adani Group of stock manipulation and accounting fraud, which wrought havoc in the conglomerate's stocks. The abrupt withdrawal of Adani Enterprises' FPO simply further deteriorated the perception of the company. Meanwhile, the Opposition cornered the Centre in the parliament demanding discussion over the issue amid a slump in share prices of the government-owned entities, which invested in the Group.
Regulators
SEBI working prime market conditions well: Sitharaman
Sitharaman said that regulators like the Securities and Exchange Board of Idia (SEBI) have been monitoring the developments around the Adani Group independently. "The market has functioned in prime condition. SEBI has worked on it well," she said at a post-budget press conference in Mumbai. She appreciated banks and Life Insurance Corporation (LIC) for coming came out with their exposure to the Adani group.
Comments
Finance Minister says Indian market is well regulated
While replying to a query about FPO pull out by Adani Enterprises, Sitharaman reiterated her early statement saying that the market is well regulated and regulators will do their job. "RBI made a statement. Prior to that banks, and LIC came out and told about their exposure. Regulators are independent of the government and they do what is appropriate," Sitharaman said.
Statement
India's foreign exchange reserve up by $8 billion: Sitharaman
"FPOs come and get out. These fluctuations happen in every market. But the fact that we had 8 billion come in last few days proves that the perception about India and its inherent strength is intact," she said commenting on the Adani FPO pullout. "How many times has the image of India been suffering because of the FPOs?" she asked.
Experts
FPO pullout and government response
On Wednesday Gautam Adani-led Enterprise withdrew its fully-subscribed Rs. 20,000 crore FPO after its shares fell around 30%. The company claimed it will protect investors from potential losses. Later, Finance Secretary TV Somanathan responded saying the situation is a "storm in a teacup" from the macroeconomic point of view. Soon, he came under attack from opposition parties. However, on Saturday, he reiterated his statement.
Issue
A political crisis in making
The opposition wanted a debate on the controversy in Parliament as it become a political hotspot. They also demanded a joint parliamentary committee or a court-monitored investigation into the allegations against the Group. However, the finance minister downplayed the issue claiming that India's banking system ware well heavily regulated and one incident would not be representative of or change the perception of the country.