Japanese banks reaffirm support for Adani amid controversy

In recent weeks, Japanese banks have made significant decisions regarding their financial relationships with the Adani Group, a leading Indian conglomerate. Despite facing serious allegations involving a bribery scheme linked to solar energy contracts, Japanese lenders, including Mizuho Financial Group, Sumitomo Mitsui Financial Group, and Mitsubishi UFJ Financial Group, have expressed their intent to maintain their support for the Adani Group. Mizuho, in particular, believes that the recent saga will not have a long-lasting impact, as the group has not defaulted on any payments. The Adani Group, which operates in various sectors from ports to power, has been in the spotlight since being charged alongside others in the alleged scheme to bribe Indian government officials for favorable contracts. The allegations, which the Adani Group has termed baseless and unsubstantiated, have prompted varying responses from financial institutions globally. While Japanese banks appear to remain steadfast, Barclays has decided to suspend new loans and financing to the group, heightening the divide among finance firms regarding their support for Adani. Amidst this controversy, global banks like Jefferies Financial Group are cautiously assessing their exposure. Jefferies stood by the Adani Group previously, but following the recent charges, they have not engaged in new dealings and are awaiting further clarity before proceeding. The ongoing scrutiny surrounding the conglomerate has resulted in a cautious atmosphere; some banks are now curbing their exposure due to reputational concerns, balancing their willingness to finance amid rising risks. Despite the ongoing investigations and the resultant wariness among some banks, Japanese lenders see potential in the Adani Group, highlighting the reputation of the group’s cash-generative assets. Many of these banks view India as an essential growth market and are not inclined to significantly reduce their exposure in the region, although they might tighten risk processes or impose higher premiums for certain transactions. The support from these banks is particularly crucial as Adani aims to reassure lenders and investors by outlining its position in light of the accusations.