MUMBAI  - The exposure of Indian banks to the embattled Adani Group is "insufficient in itself" to present a substantial risk to the credit profiles of these lenders, Fitch Ratings said in a note on Tuesday.

Investors have been worried about various banks' exposure to the group ever since late January when U.S.-based short-seller Hindenburg Research alleged improper use of offshore tax havens and stock manipulation by the conglomerate. The group has rejected the criticism and denied any wrongdoing.

Fitch estimated that loans to all Adani group entities generally account for 0.8%-1.2% of total lending for Indian banks rated by the agency, equivalent to 7%-13% of total equity.

"Even in a distress scenario, it is unlikely that all of this exposure would be written down, as much of it is tied to performing projects," it said.

Earlier on Tuesday, the ratings agency's unit, CreditSights, said in a separate note that State Bank of India's exposure to the group is "well-manageable" given its strong buffer of provision reserves.

SBI's total exposure was 0.9% of its total loan book, or around 270 billion rupees, Chairman Dinesh Kumar Khara has said.

CreditSights pointed out that the country's largest lender has a provision reserves buffer of around 338 billion rupees ($4.08 billion), or around 1% of net loans.

It added SBI also has the capacity to generate significant pre-provisioning operating profit, or income before taking into account future bad debt provisions.

Additionally, most of the bank's exposure to the Adani Group was secured by completed and cash-generating assets while the rest of the exposure was to on-schedule, under-construction projects, said CreditSights.

Although SBI has some non-funded exposure, it comprises letters of credit and bank guarantees that do not relate to equity raising or acquisition activities, it added.

SBI's Khara has said the Adani Group's exposure did not pose any concern for the bank and that he did not see any challenges to the conglomerate's ability to service its debt obligations.

Fitch, however, cautioned that Indian state banks could face pressure to provide refinancing for Adani entities if foreign banks scale back their exposure or investor appetite for the group's debt weakens in global markets.

"This could affect our assessment of the risk appetite of such banks, particularly if not matched with commensurate building of capital buffers."

To allay concerns, the Reserve Bank of India (RBI), as the country's banking regulator, has said that the Indian banking system remains resilient and stable. ($1 = 82.7475 Indian rupees)

(Reporting by Siddhi Nayak; Editing by Savio D'Souza)