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Questions on SBI’s loan plan for Adani

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OUR SPECIAL CORRESPONDENT Published 21.11.14, 12:00 AM

New Delhi, Nov. 20: The Congress today questioned the propriety and timing of an SBI plan to consider loaning $1 billion (Rs 6,200 crore) for a controversial mining project in Australia led by industrialist Gautam Adani, perceived to be close to Prime Minister Narendra Modi.

Both the Adani group and the SBI have insisted that the government-owned bank would release funds only after conducting a series of checks on the project that Australia’s government desperately wants, amid a flurry of job losses in its coal sector.

The Adani group and the SBI inked a pact for the loan hours after Adani, SBI chairperson Arundhati Bhattacharya and Modi sat with officials of Queensland in Brisbane on Monday at a meet where the province agreed to facilitate the project.

“What was the propriety of the SBI giving the loan to Adani, who was sitting next to the Prime Minister during the visit?” Congress general secretary Ajay Maken asked.

The Adani group — which has denied reports that several private banks had turned down its requests to finance the Carmichael coal mining project — had announced the SBI loan while its chief was in Melbourne with Modi.

Today, the SBI clarified that it had only signed a memorandum of understanding with the Adani group to consider the loan — and had not yet sanctioned it.

“This is not a loan sanction that we have given. It will go through proper due diligence, both on the credit side as well as on the viability side,” SBI chief Bhattacharya said in New Delhi.

But the willingness of the SBI to consider the loan is likely to help the Adani group lobby other financial institutions for loans. The Carmichael project is worth $7.6bn (around Rs 47,000cr).

“When five top foreign banks have already declined to fund Adani’s project, what was the need and the sense in giving such a huge loan to him from the hard-earned money deposited by the common people? Did the SBI do the due diligence? If it did so, why is it not declaring the MoU? On what conditions was it done? And what was the liability?” Maken asked.

During Modi’s visit, Queensland also committed to buying minor, short-term stakes in infrastructure initiatives linked to the Carmichael project.

The project, if it succeeds, will be Australia’s largest coal mining venture at a time the country is struggling to cope with the loss of over 4,000 jobs in the sector over the past two years because of bottlenecks in multiple projects.

Local environmental groups have been protesting the Carmichael project, arguing that it may threaten the Great Barrier Reef.

The Congress spokesperson also questioned Modi’s thrust on coal mining in Australia. “The Prime Minister said the whole of India would be lit up with Australian coal. The coal minister said that possibly in the next two to three years, India would be able to stop the import of coal,” Maken said, and wondered who of the two was right.

Union minister Ravi Shankar Prasad iterated that the loan had not been given yet and that an MoU had been signed. “The government has nothing to do with it,” he said.

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