Uday Kotak, the chief executive officer of Kotak Mahindra Bank, said on Sunday, "(It's) time to further strengthen Indian underwriting and capacity building." His statement came amid concerns over Indian banks' exposure to the crisis-ridden Adani Group. Reacting to the issue, Kotak said he can't see systemic risk to Indian financial system.

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I do not see systemic risk to Indian financial system from recent events. However,large Indian corporates rely more on global sources for debt and equity finance. This creates challenges and vulnerabilities. Time to further strengthen Indian underwriting and capacity building.

— Uday Kotak (@udaykotak) February 5, 2023Earlier, Finance Minister Nirmala Sitharaman, the Securities and Exchange Board of India (Sebi) and even the Reserve Bank of India (RBI) asserted that the risk to Indian financial system, particularly to banks, is limited. However, that’s not the only way this Adani episode hurts India. If this leads to foreign investors and lenders losing confidence in India's governance systems, the cost of capital and loans will go up for everyone — and not just the Adani Group of companies.

Also Read: LIC has not sold any Adani group shares in current selloff: Exclusive

The group had a gross debt of Rs 1.88 trillion in March 2022 and net debt of Rs 1.61 trillion after considering the cash balance.

Adani Group stocks have taken a beating on the bourses after US-based activist short-seller Hindenburg Research made a litany of allegations, accusing the the Gautam Adani-led group of fraudulent transactions and share price manipulation.

The Adani group has dismissed the charges as "lies" and said it complies with all laws and disclosure requirements. The 10 listed Adani group firms have faced a combined erosion of over Rs 8.5 lakh crore in just six trading sessions. Adani Enterprises also had to withdraw a Rs 20,000 crore share sale.

Also Read: NSE puts Adani Enterprises, Adani Port, Ambuja Cement under ASM framework