Inter Creditor Agreement Signed By Indian Banks
“We finally have the banks that recognize the importance of working as a team to work together to find a solution to the banking problem and ensure an orderly flow of credit in the future,” he added. Goyal added that the ICA, developed by the banks themselves, is really a reflection of the consciousness that has just entered the Indian banking system. The agreement, as proposed by a committee led by the President of the National Bank of Punjab, Sunil Mehta, is a “big step forward” in solving the problem of stressed assets and was developed under the Insolvency and Insolvency Act (IBC), Goyal Reporters said on the sidelines of a conference organized by the Confederation of All India Traders (CAIT). The ica said on Monday: “In accordance with the recommendations of the Sunil Mehta Committee and under the auspices of the Association of Indian Banks (IBA), an inter-credit agreement (ICA) has been prepared to serve as a platform for banks and financial institutions to come together and take joint and concerted steps to resolve the most stressed accounts.” The Business Standard reports that 24 lenders, led by SBI and PNB, signed an agreement between creditors on Monday to speed up the liquidation of the most stressed assets of 500 million euros in syndicated loans. To ensure a rapid resolution of troubled assets, some 22 public sector banks (including India Post Payments Bank), 19 private lenders and 32 foreign banks signed the Inter-Creditor Agreement (ICA) on Monday to quickly monitor the resolution of stressed assets. Finance Minister Piyush Goyal called the move a “big step forward” in the fight against non-performing loans from the banking sector. The agreement was also signed by 12 major financial institutions such as LIC, HUDCO, among others. This agreement is terminated if there is a guide or order from the RBI or other regulatory or government authority to terminate it. “Almost the entire banking system and leading NBFCs such as the REC, the PFC join the ICA, which has abstained for decades in the past with a quick and effective resolution of stressed assets,” Goyal said, adding that several others, including ICICI Bank, would join the agreement after seeking board approval. It should be noted that the agreement or pact between creditors is denounced in certain situations, such as the direct intervention of the Reserve Bank of India. The first review of progress under the creditors` agreement could be completed after three months.
According to the ICA, “the spring lender, the lender with the highest exposure, is authorized to formulate the resolution plan subject to lender approval.” Decision-making is done by the approval of the “majority lenders”, who hold 66% of the total commitment. The ICA agreement covers cases of stressed assets worth at least 50 kronor in syndicated loans. The ICA is signed by 22 public sector banks, including India Post Payments Bank, 19 private sector banks and 32 foreign banks. In addition, 12 major financial institutions, such as LIC and HUDCO, signed the agreement. The Inter-Creditor Agreement, or ICA, which is a direct result of the sashakt resolution plan or the government`s report on bad bank, drawn up by the Sunil Mehta Committee, will work as follows: lenders will jointly designate, in the agreement, a leading lender that will work on behalf of the entire group.