Adani was faced with margin call on a $1.1bn loan, before he was able to repay in full

Lenders’ request for $500mn cash from Indians prompted prompt settlement of all debts and puts pressure on Indian credit groups Gautam Adani, whose Indian business empire is under pressure over fraud allegations, repaid a $1.1bn share-backed loan last week after facing a margin call of more than $500mn, according to four people with direct knowledge of the matter.

They claimed that the repayment was made to protect investor confidence in the group.

Adani’s empire, that spans airports and energy, is reeling after Hindenburg Research, a New York-based short seller, last month accused it accounting fraud and stock price manipulation. The Adani group denies the allegations.

According to people familiar with the matter, the $1.1bn loan lenders, which included Barclays and Citigroup, asked last week for the billionaire to increase the stock pledged against it after a sharp fall of shares in Adani listed companies.

The allegations were made public on January 24th. At one time, the value of the listed businesses was reduced by Rs9.4tn ($114bn) or approximately 50%.

Barclays informed Adani that a margin call was being made to cover 50 percent of the loan in cash as the shares continued to slide.

The Adani Group founder and his family chose to repay the entire loan. Adani has not revealed the source of the funds used for the repayment of the loan.

Adani Group stated that it had not received a formal request to make a margin call. The company said that the full loan was paid off early as part of its prepayment plan.

The indebted group is trying to stop the crisis by dispelling fears that it is being pressured to pay margin loan losses. According to Indian media, it dismissed the claims that it was under pressure to cover losses on margin loans as “market rumours”.

Adani made Monday the early repayment in full of the loan, calling it a proactive step to reduce leverage.

Adani refused to identify the corporate or personal borrower of the $1.1bn loan. However, Adani referred a statement that was released this week. It stated that the prepayment was “in continuation to the promoters’ commitment to decrease the overall promoter leverage”. Indian promoters are founders and the people who control a company.

JPMorgan and Japan’s SMBC Group were also part of the lending group. All banks declined to comment.

One person said that the early repayment had a “calming effect” on international lenders and helped ease internal pressures. These lenders are currently facing requests from credit and risk management committees to decrease their exposure to the conglomerate.

Adani stated that the repayment would allow Adani Ports to release 168mn shares, Adani Green Energy 27mn, and Adani Transmission 12mn.