The Congress on Friday demanded an investigation by the SEBI and RBI into charges of alleged financial irregularities against the Adani Group, which has denied the charges.

Congress general secretary Communications Jairam Ramesh said the forensic analysis by the Hindenburg research into the Adani Group requires serious investigation by bodies like the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), as they are responsible for ensuring stability and security of the country's financial system.

"We fully understand the close relationship between the Adani Group and the current government. But it is incumbent on the Congress party as a responsible opposition party to urge SEBI and RBI to play their roles as stewards of the financial system and to investigate these allegations in the wider public interest," Ramesh said in a statement.

Hindenburg Research has alleged that Adani Group was "engaged in a brazen stock manipulation and accounting fraud", a charge the conglomerate described as malicious, unsubstantiated, one-sided, and having done with malafide intention to ruin its share-sale.

Hindenburg, a US-based investment research firm that specialises in activist short-selling, said its two-year investigation reveals that "the Rs 17.8 trillion (USD 218 billion) Indian conglomerate Adani Group has engaged in a brazen stock manipulation and accounting fraud scheme over the course of decades." Adani Group said it was shocked to see the report that came out without any attempt to contact it to get the factual matrix. "The report is a malicious combination of selective misinformation and stale, baseless and discredited allegations that have been tested and rejected by India's highest courts," the ports-to-energy conglomerate said in a statement.

Ramesh said the Modi Government can try and impose censorship, "But in an era of globalisation of Indian businesses and financial markets can Hindenburg-type reports that focus on corporate 'misgovernance' be simply brushed aside and dismissed as being 'malicious'?" He said the evolution and modernisation of India's financial markets since the 1991 reforms has aimed to improve transparency and to a level playing field for domestic and foreign investors.

It has specifically sought to increase the transparency of financial flows into the country — to prevent round-tripping and money-laundering by actors that could include criminals, terrorists and hostile countries — and to reduce dependence on offshore tax havens, the Congress leader said.

"For all its posturing about black money, has the Modi government chosen to turn a blind eye towards illicit activities by its favourite business group? Is there a quid pro quo? Will SEBI investigate these allegations to the fullest and not just in name?" he asked.

The allegations of financial malfeasance would be bad enough, but what is worse is that the Modi government may have exposed India's financial system to systemic risks through the liberal investments in the Adani Group made by strategic state entities like LIC, SBI and other public sector banks, he alleged in the statement.

Ramesh claimed these institutions have liberally financed the Adani Group even as their private sector counterparts have chosen to avoid investing because of concerns over corporate governance and indebtedness. "As much as 8 percent of LIC's equity assets under management, amounting to a gigantic sum of Rs 74,000 crore, are in Adani companies and comprise its second-largest holding," he said.

State-owned banks have lent twice as much to the Adani group as private banks, with 40 per cent of their lending being done by the SBI, he also alleged.

"This irresponsibility has exposed the crores of Indians who have poured their savings into LIC and SBI to financial risk. If, as alleged, the Adani Group has artificially inflated the value of its stock through manipulation, and then raised funds by pledging those shares, banks such as SBI could face heavy losses in the event of a fall in those share prices," he said.

"Will the RBI ensure that risks to financial stability are investigated and contained? Are these not clear-cut cases of 'phone banking'," he asked, alleging that the Adani group has built monopolies in ports and airports and become an overwhelmingly dominant player in power, roads, railways, energy and media.

The Congress general secretary said normally a political party should not be reacting to a research report on an individual company or business group prepared by a hedge fund, but the forensic analysis by Hindenburg Research on the Adani group demands a response from the Congress party.

"This is because the Adani Group is no ordinary conglomerate: it is closely identified with Prime Minister Narendra Modi since the time he was chief minister," Ramesh said.

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