MUMBAI: India’s Adani Group has reached out to banks to try to allay their concerns as some consider tighter credit rules for the embattled conglomerate after a botched $2.5 billion share sale and a massive sell-off in its stocks, several bankers said.

Shares of Adani Group companies have lost more than half their market value, or in excess of $100 billion combined, after U.S. short-seller Hindenburg Research raised questions last week about their debt levels and use of tax havens.

The ports-to-energy conglomerate, led by Gautam Adani, one of the world’s richest men, rejects the criticism and denies wrongdoing.

But the market turmoil led its flagship Adani Enterprises to abandon a $2.5 billion secondary share offering on Wednesday, prompting concerns at lenders.

Top Adani executives held a call this week with State Bank of India (SBI), which has the highest exposure to the group, to say it wasn’t facing any issues with repayments and cash flow, a senior banker with knowledge of the meeting said.

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India’s No. 1 lender, SBI says the bank has about 270 billion rupees ($3.3 billion) in loans to Adani Group.

Bank debt forms 38% of the total debt of 2.1 trillion rupees at the top five Adani companies, according to a Jefferies report.

Referring to Hindenburg’s allegations, another senior SBI banker said the concerns raised had become a “big issue”, and would have to be evaluated carefully.

SBI will ask questions about the allegations if and when Adani group companies approach the lender for fresh credit, and then take a decision, said the second banker.

Both bankers declined to be named due to the sensitivity of the matter.

Adani and SBI did not respond to emails requesting comment.

Adani group to review capital raising after $2.5bn share sale’s withdrawal

SBI chairman Dinesh Khara told a post-earnings press conference on Friday that the bank didn’t envisage any challenges from Adani Group, but further financing for its projects would be evaluated on merit.

“As far as going forward, each project will be evaluated on its own merit. And also it is a discussion which is vested with the credit committees. So everybody will be very mindful about what the situations are and accordingly decisions are taken,” said Khara.

A day after the share offering was pulled, Gautam Adani said the group’s cash flow was “very strong” and it would review capital raising once the market stabilised. He said the group had an “impeccable” track record of fulfilling debt obligations.

Tighter credit criteria

Credit rating agency Moody’s said on Friday the adverse developments around Adani were likely to reduce its ability to raise capital to “fund committed capex or refinance maturing debt” over the next one to two years.

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However, it said a portion of Adani’s capital expenditure was deferrable, and its rated entities did not have significant maturing debt until fiscal year 2025.

Besides SBI, Punjab National Bank, Bank of Baroda and other state-owned and private lenders have exposure to the Adani group of companies, bankers said, though details of loans outstanding at individual lenders are not available.

Punjab National Bank and Bank of Baroda did not respond to Reuters requests for comment. Bank of Baroda’s CEO Sanjiv Chadha said at a press conference on Friday the bank had “absolutely no concern” on its exposure to Adani.

Adani also sent an email to a mid-sized lender this week in which it said Hindenburg’s report was done with “malicious intent” and in an attempt to “target the company”, said an official at the bank, who has reviewed the mail.

The report has no bearing on the debt servicing capacity of the company, the mail said.

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Despite Adani’s message, the Mumbai-headquartered mid-sized lender has decided, after an internal review, to be cautious on approving fresh loans to the group, said the official.

Senior executives at six other Indian lenders, with exposure to Adani companies, told Reuters they had also decided to tighten the credit approval process for Adani.

India’s central bank has asked local banks for details of their exposure to Adani companies, Reuters reported on Thursday, citing government and banking sources.