Punjab National Bank (PNB) has an exposure of Rs 7,000 crore to Adani Group and is closely monitoring the developments but currently there is no worry pertaining to those accounts, the state-run lender’s managing director and CEO Atul Goel said today.

Adani group’s stock values have been caught in a storm after US short-seller Hindenburg Research alleged last week that the ports-to-energy-to-cement conglomerate had engaged in “brazen stock manipulation and accounting fraud” for decades. Since the report raised concerns about the group’s high debt levels and the alleged use of offshore entities in tax havens, Adani firms have lost $65 billion in stock values.

"Whatever exposure we are having is backed by cash flow. Total exposure include investment of Rs 42 crore in bonds and the rest is towards debt for various projects," said Goel while talking to reporters on Monday at a virtual press conference after the bank’s quarterly results.

Out of PNB’s Rs 7,000 crore exposure, around Rs 2,500 crore is related to Adani’s airport business.  While Rs 6,300 crore is fund-based exposure, the remaining Rs 700 crore is non-fund based.

Goel clarified that PNB has not given any loan to the Adani Group by pledging shares. 

The bank is keeping a "close eye" on the developments following  Hindenburg's research report, Goel said, adding that “as on date there is no worry as the bank has not too much exposure keeping the size of the lender”.

PNB said that its exposure is spread across 8-9 companies of Adani group which are generating sufficient cash flows.

Earlier on Sunday, the Adani Group in a 413-page rebuttal denied all charges made by Hindenburg Research and said that “this is not merely an unwarranted attack on any specific company” but a “calculated attack on India”. 

Hindenburg Research responded, saying that "fraud cannot be obfuscated by nationalism."

Indian banks have around Rs 80,000 crore exposure to Adani’s firms, which is 38% of the group’s total debt. Brokerage CLSA said it estimated the consolidated debt of the group is at Rs 2.1 trillion ($25.73 billion), or at Rs 1.9 trillion, excluding inter-group lending.

While public sector banks have material exposure at 30% of group debt, this level has not increased in the past three years, CLSA said.

"While we watch for developments here, we don't see material risk arising to the Indian banking sector," brokerage firm Jefferies said in a note dated January 26.

Shares of most Adani companies fell again on Monday even after the group’s lengthy reply to Hindenburg Research’s charges.

Meanwhile, the Rs 20,000-crore secondary share sale of shares by Adani Enterprises was subscribed 3% on Day 2, with the company receiving bids for 13,98,516 shares against the total issue size of 4,55,06,791 shares. Despite rebounding on Monday, shares of Adani Enterprises are trading below the floor price of the follow-on public offer (FPO).

There was some cheer on Monday as Abu Dhabi-based diversified conglomerate International Holding Co (IHC) said it will invest $400 million into the FPO by subscribing to 16% of the total issue.