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What Was The Purpose Of Intercreditor Agreement Signed By Indian Banks And Financial Institutions

Thirty-six banks and financial institutions approved the Sashakt Committee`s recommendations. 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 agreement stipulates that any resolution plan drawn up with respect to the ICA will be in accordance with the Reserve Bank of India circular and all other applicable laws and directives. Under the ICA, which is part of the “Sashakt” project, each resolution plan is submitted by the lender on the merits to a supervisory committee. The pact gives the lead lender more powers in a consortium and allows approval of a resolution plan if 66% of the group`s banks agree. Key strengths – As part of the pact, each resolution plan is submitted by the lender on the merits to a supervisory committee. approved by the majority. , decision-making will be made by the approval of “majority lenders.” lender, it is intended for all lenders, any resolution plan established in connection with the agreement must be in accordance with the RBI circular and all other applicable laws and guidelines. oversight of the entire oversight committee. The framework authorizes the leading bank to implement a resolution plan within 180 days, and the Director would then develop a resolution plan with empanelling turnaround specialists and other industry experts for asset liquidation within the 180-day deadline set by the RBI. Other details- Each lender concerned must designate the lead lender: -If a lender does not agree, the feathered lender has the right, but not the obligation to purchase the facilities of the derogatory lenders for a value of 85% of the lower liquidation value or settlement value. This agreement is terminated if there is a guide or prescription from the RBI or other regulatory or government authority to terminate the contract. BackgroundAlcolate assets (NPAs) or non-performing loans in the banking sector exceeded 9 trillion basics at the end of December 2017 and the Reserve Bank of India warned of a further deterioration of the situation.

As of March 2018, the 50-500 crore category and 2 trillion notes under 50 crore have been the subject of nearly 3 trillion non-performing loans. That is why the EU`s finance minister, Piyush Goyal, called the signing of the ICA a major step towards solving the banking sector`s problems.

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