The exposure of banks to the embattled Adani Group is not large enough to damage their credit quality, global ratings agency Fitch and Moody’s said on Tuesday.

The ports-to-power conglomerate plunged into a crisis on January 24, when United States-based short-seller Hindenburg Research alleged that it amassed substantial debt by pledging overvalued shares. In the following days, shares of Adani Group companies fell sharply on account of the allegations.

The Opposition has been claiming that ordinary citizens were losing money on account of investments made by the state-owned Life Insurance Corporation and State Bank of India in the conglomerate led by billionaire Gautam Adani.

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Fitch Ratings said on Tuesday that the exposure of Indian banks to the Adani Group is insufficient in itself to present a substantial risk to their standalone credit profiles. It added that bank ratings “remain driven by expectations that the banks would receive extraordinary sovereign support, if needed”.

Fitch, however, noted that the Adani Group plays an important role in India’s infrastructure sector. “Infrastructure development may slow, curbing India’s sustainable economic growth rate, if its ability to contribute to the government’s infrastructure rollout plans is impaired, though we believe the impact on growth would be likely to be small,” the ratings agency said.

Moody’s said that although public sector banks have greater levels of exposure to the Adani Group than private banks, the extent of the exposure is less than 1% of total loans for most banks, PTI reported.

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“Risks for banks can increase if Adani becomes more reliant on bank loans,” it said. Moody’s, however, said that the overall quality of Indian banks’ corporate loans will remain stable.

Allegations against the Adani Group

In its January 24 report, Hindenburg Research claimed that the conglomerate has over the decades been involved in stock manipulation, accounting fraud, used offshore shells for money laundering and siphoned money from listed companies.

The Adani Group described the Hindenburg Research report as a “calculated attack” on India and its institutions.

“It is tremendously concerning that the statements of an entity sitting thousands of miles away, with no credibility or ethics has caused serious and unprecedented adverse impact on our investors,” the Adani Group said.