Adani crisis will ‘play out’ in the market: Economic Affairs Secretary

Ajay Seth, Economic Affairs Secretary.
| Photo Credit: The Hindu

The crisis around the Adani group will “play out” in the market and it is up to financial sector regulators to examine if a specific company has stuck to the rulebook, a top Finance Ministry official said on Thursday, hinting that there should be no impact on India’s credibility as a market.

Also read |RBI said to seek details of banks’ exposure to Adani Group

Responding to a query on concerns about regulatory oversight in light of the recent crisis engulfing Adani group firms, Economic Affairs Secretary Ajay Seth said that he would not comment on “this company’s transactions” and indicated that even for regulators, exercising oversight over each “economic actor” is not necessary unless there are systemic issues involved.  

“The regulator needs to see — are there any systemic issues? How is the overall sector behaving? Oversight doesn’t mean for each and every company…. Where is the capacity, and is it really needed for somebody to oversee each and every economic actor?” he told  The Hindu.  

“This will play out in the market. This is one company’s events and the regulator will have a look at it whether they have adhered to the norms of the market,” Mr. Seth said.  

Explained | Adani Group stocks: What is Hindenburg Research, and how does a short seller operate? 

Regulators’ focus on systemic issues

At the last meeting of the Financial Stability and Development Council in September, where the Finance Ministry interacts with sectoral regulators, Mr. Seth said that discussions did occur on whether regulators were “doing enough about systematically important institutions, are we nimble enough or do we have to look at any of our regulations afresh”.

“But that’s a continuous process,” he noted.  

Giving an example, Mr. Seth said that a clutch of brokers using investors’ money “left and right” without impunity, would be considered a systemic issue. “It doesn’t get into a particular broker or company… The regulator does not get into that because it is not important from the overall systemic point of view,” he explained.