In November 2020, news that the State Bank of India was considering loaning AUD $1 billion to Adani’s Carmichael coal mine swept through Australia. Protests erupted. Subsequently, major financial-service companies, including investors in the SBI, have warned of dire consequences if the loan proceeds.

Financial analysts have also been critical. On 8 December, for example, Crikey’s John Quiggin said that a loan to the controversial coal mine would be an even worse investment today than it was when the SBI rejected a similar proposal in 2014. That’s because the mine has been downsized, thereby increasing the proportion of a billion-dollar loan to the overall value of the project. In Quiggin’s words:

'The proposed loan from SBI would amount to half the project’s value. If the project falls short of its goals regarding output, sales price or cost efficiency, SBI will very likely be exposed to some of the loss.'

The downbeat assessment comes in the wake of reports that major investors in the SBI were warning the bank off the Adani coal mine.

On 4 December, Bloomberg reported that US-based BlackRock Inc and Norway’s Storebrand ASA had contacted the SBI about the loan. According to the report, Storebrand said ‘financing new coal plants is clearly not part of a sustainable future.’ BlackRock has raised objections due to the environmental, social and governance (ESG) problems associated with the Carmichael coal mine.

Earlier, the Business Standard reported that the French financial-services giant Amundi had threatened to divest from the SBI if the loan to Adani went ahead.

The majority shareholder of the SBI is the Government of India. The bank is therefore backed by the Indian taxpayer. The close association between India’s Prime Minister, Narendra Modi, and the Adani Group’s founder, Gautam Adani, is notorious. The SBI, in deciding whether to loan a billion dollars to an Adani company, may have to deal with a clash between commercial good sense and hard politics.

The NGO Market Forces has ramped up the pressure on another investor in the State Bank of India, the UK-based bank HSBC, with an email/twitter campaign that can be found here.

According to Market Forces, HSBC is a major green bond arranger for SBI, contributing to hundreds of millions worth of funds for the bank. This capital that HSBC has raised for SBI may have helped free up other funds for SBI to sink into devastating thermal coal projects like Carmichael. Expert economic analysts have called out HSBC for saying one thing but doing another - spruiking its green bonds while remaining silent as their client SBI considers a massive loan to Adani’s climate-wrecking project. Any climate benefit from the green bonds would be overwhelmed by the damage done by the massive Adani coal mine.