What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?

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CollectorBabu · Accepted Answer

Correct Answer: To aim at faster resolution of stressed assets of ₹ 50 crore or more which are under consortium lending. The purpose of Inter-Creditor Agreement (ICA) is faster resolution of stressed assets of 50 crores or more which are under consortium lending. State Bank of India along with 23 other public sector bank, 19 private banks and 32 foreign banks signed ICA in 2018. Whereby the lenders in the agreement will jointly appoint a lead lender who will function on behalf of the entire group. The leading lender will then be required to put forth the resolution plan for the non-performing assets (NPAs) before the group and if it is given a go-ahead by two thirds of the lenders, the proposal will qualify to be taken up for resolution of the given account. It is part of the “Sashakt” plan approved by the government to address the problem of resolving bad loans.

What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?

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