The Adani Group, one of India’s largest and most diversified conglomerates, is facing mounting financial scrutiny after U.S. prosecutors indicted its chairman, Gautam Adani, for alleged involvement in a bribery and fraud scheme.
As a result, several global banks are reconsidering their credit exposure to the company, with some reportedly mulling over halting fresh loans to the group until the full scope of the legal challenges becomes clearer. This crisis is the second significant setback for the Adani Group in recent years, raising concerns about its future ability to secure financing.
On Thursday, U.S. prosecutors unveiled charges against Gautam Adani and seven others, accusing them of paying approximately $265 million in bribes to Indian government officials.
The bribes were allegedly offered in exchange for favorable treatment related to contracts and the development of India’s largest solar power plant project. These serious allegations come just two years after the conglomerate faced a major financial crisis, and now they are further tarnishing the group’s reputation.
Adani Group has strongly denied the accusations, calling them “baseless,” and emphasized that its operations have always been conducted in compliance with the law. Despite these denials, the indictment is having an immediate impact on the company’s financial standing, prompting some of its global lenders to reconsider their involvement.
READ ALSO: Asian Markets Rally Following Wall Street Gains, Bitcoin Nears $100K Milestone
In light of the ongoing legal developments, senior executives at two major international banks that have credit exposure to Adani Group have expressed concerns about the company’s future financial stability. Sources familiar with the matter revealed that there have been internal discussions within these banks, assessing the risk associated with their exposure to the conglomerate.
A senior banker at one of the Western banks, speaking on the condition of anonymity, stated, “We will have to put a pause to fresh lending until we are able to figure out how this will play out.” The banker further added that it could take a while before the Adani Group is able to tap the credit market again, given the uncertainty surrounding the case.
Despite this cautious approach, the banker also noted that most of Adani Group’s firms have stable cash flows, suggesting that they are not in “desperate need” of new capital at the moment. However, the ongoing legal issues have created an air of caution among lenders, particularly when it comes to extending new credit.
Reputational risk is a significant concern for lenders in such high-profile cases, and this is one of the primary reasons why some banks are pausing fresh lending to Adani Group. A Japanese bank with known credit exposure to Adani also weighed in on the situation.
READ ALSO: Gold Soars While Euro Stumbles Amid Escalating Geopolitical Tensions
According to the bank, while individual legal issues like the indictment of a key executive may not typically break loan covenants, the reputational fallout from such an indictment can create challenges for banks looking to continue their business relationship with the company.
The Japanese bank emphasized that the situation involving Adani Group is unique, as many financial institutions are weighing the risks of being associated with a conglomerate facing such serious allegations. Despite the fact that the group’s companies have not defaulted on any loans, the legal and reputational risks are now forcing banks to take a more conservative stance on future lending.
The Adani Group’s troubles are also unfolding against a politically charged backdrop. Opposition parties in India, who have long criticized the cozy relationship between Adani and Prime Minister Narendra Modi—both of whom hail from the western state of Gujarat—are calling for an independent investigation into the allegations of fraud and bribery.
However, despite the political pressures, both Modi and Adani have denied any wrongdoing, with the Indian government standing by the conglomerate. The banker quoted in the earlier discussion noted that Adani has become “too-big-to-fail” for India, given its extensive presence in key sectors such as infrastructure, energy, and ports.
READ ALSO: ‘Dogecoin Millionaire’ Unveils $50M Meme Coin Plan: Pepe and Brett Set to Lead 2025 Bull Run
“Our future course of action will largely depend on whether the government will now try to find a way to resolve this or launch its own probe,” said the senior banker, reflecting on the group’s significant role in the Indian economy.
As the legal battle unfolds, the banks involved with Adani Group find themselves in a delicate position. They must carefully balance their financial interests with the reputational risk of continuing to engage with a conglomerate under such scrutiny. It is still uncertain how this situation will evolve, but the response from financial institutions will likely set a precedent for how global banks deal with large-scale allegations of corporate misconduct in the future.
For now, the Adani Group’s access to fresh credit remains uncertain, with banks focusing on minimizing risk while monitoring the outcome of ongoing legal proceedings. The resolution of these issues could significantly impact not only Adani’s ability to raise capital but also its long-term standing in global markets.