“SBI, don’t fund coal, fund solar”, read one of the placards outside India’s largest public sector bank where activists gathered this morning for a protest. The State Bank of India or SBI, in a baffling move signed a Memorandum of Understanding with India’s power giant Adani, potentially opening up a line of credit of up to 1 Billion USD. The loan would be used to develop the Galilee Basin, Australia’s largest coal endowed site. The move is being criticised and scrutinised by many people across civil society and even the financial sector.
Major global banks around the world (RBS, Deutsche, HSBC etc) have already declined funding for the project which when developed could export 60million tonnes of coal a year and ship it through the ecologically fragile Great Barrier Reef. Declining a loan seems obvious when we look at the fact that Adani can no way run a profitable business without dramatically increasing the electricity tariffs for end consumers in India, wrecking the great barrier reef, putting an incredible amount of carbon in the air, destroying peoples health and violating every major environmental norm in the book. Unfortunately, both the Abott Government in Australia and the Modi Government in India are keen to turn a blind eye to this.
The loan exposes the crony capitalism that is hurting India’s markets. The company chairman Gautam Adani is known to have very good ties with the Prime Minister Narendra Modi and one cannot escape the coincidence that this loan came fast on the heels of the G20 summit in Brisbane.
While different agencies (political, regulatory and otherwise) scrutinise the loan agreement, it is important for us to pile on the heat on SBI and the Reserve Bank of India (RBI) to revoke this dangerous loan and show the exit door to Adani from the Galilee basin.