RBI should probe LIC, Public Sector Banks' losses due to adani stock rout: Jairam Ramesh

Congress leader Jairam Ramesh has written to SEBI chairman and RBI Governor urging them to investigate the effect of financial irregularities of Adani Group on Public Sector Banks(PSB) and the Life Insurance corporation of India.

In his letter to SEBI, he wrote that several Indian citizens were disturbed by the allegations that the Adani Group has indulged in "brazen stock manipulation" and "accounting fraud" via "a vast labyrinth of offshore shell entities".

"Apart from the potential violation of several Indian laws, this goes against everything that the Securities and Exchange Board of India (SEBI) stands for. We urge you to investigate all potential violations and to ensure complete transparency about who is investing in Adani Group companies.

"Given the Adani Group's size and political connections, it is incumbent that such investigations are seen as fair and complete, with no favour shown to the influential business group. Any failure to do so will cast a shadow on Indian corporate governance and on India's financial regulators, and could affect our ability to raise funds globally."

LIC, he said, which 30 crore Indians trust with their life savings, has lost thousands of crores in Adani Group stock in recent days. "Should we not ensure that such public sector financial institutions are more conservative in their investments than their private sector counterparts and free from pressure from above?

Meanwhile, in the letter to RBI, Jairam wrote ,"The RBI must look into two aspects: One, what is the true Adani Group exposure of the Indian banking system? Two, what are the explicit and implicit guarantees that the Adani Group has been given that it will be bailed out by Indian banks if foreign funding dries up?

"Will the RBI ensure that Indian banks are not forced to step in to substitute for any shortfall in foreign financing, especially given the Adani Group's political connections? Public sector financial institutions like the Life Insurance Corporation of India and the State Bank of India have been unusually generous to the Adani Group in recent years. The RBI must ensure that risks to financial stability are investigated and contained."

Requesting RBI to take every possible step to protect India's banks and financial institutions, the Congress veteran said, "We urge you to act in the national interest to ensure that India's taxpayers do not pay the price for the misgovernance and potential illegalities of one influential business house."

Last month, US-based short-seller firm Hindenburg Research published a report accusing Adani Group companies of engaging in decades of "brazen" stock manipulation and accounting fraud.

(With inputs from IANS)