Inter Creditor Agreement Pib

15. The Government of India and the Asian Development Bank (ADB) have signed a $100 million loan agreement for the extension of sewer and drainage coverage in Calcutta The intermediate loan agreement aims to liquidate credit accounts of 50 crore or more, which are under the control of a group of lenders. It is part of the government-approved “Sashakt” plan to address the problem of solving non-performing loans. Indian banks trying to sell their troubled assets now have one less hurdle to overcome. A group of banks, including the public sector, the private sector and foreign banks, signed an agreement between creditors on Monday to push for the rapid resolution of bad debts on their balance sheets. Under the agreement, a majority representing two-thirds of loans in a consortium of lenders should be sufficient to remove any objections to the dissenting lenders` resolution process. Minority lenders who suspect that they are short-circuited by other lenders can now either sell their assets to a willing buyer for a discount or buy loans from other lenders for a premium. The agreement between creditors aims to liquidate credit accounts of 50 crore or more in size, under the control of a group of lenders. It is part of the government-approved “Sashakt” plan to address the problem of solving non-performing loans.

In recent years, Indian banks have been forced by the Reserve Bank of India to identify problematic assets in their books, but their resolution has remained a challenge. According to banker Sunil Mehta, who headed a body that recommended the plan, disagreement between joint lenders is the main problem to resolve stressed assets. The government hopes that the problem of the holdout, for which the objections of some lenders prevent an agreement between the majority lenders, will be solved by the agreement reached between the creditors. 37. The firm approved an agreement between India and Jordan on customs cooperation and mutual assistance In accordance with the Reserve Bank of India`s (RBI) Prudential Framework for Resolution of Stressed Assets(RBI), the Association of Indian Banks (IBA) has established an Inter-Credit Agreement (ICA) that provides details on donor meetings, coordination issues , payments to derogatory lenders and additional financial resources. The government has taken a number of steps to help revive stalled projects. A project monitoring group has been set up as an institutional mechanism to address a wide range of problems, including the acceleration of approvals. As of 1.1.2019, more than 3,191 questions raised on the PMG portal concerning 725 expected investment projects of 29.88 aff. and 513 inter-ministerial meetings and 247 meetings with the Chief Secretary of States were held to resolve related issues and sharing. In addition, interdepartmental groups have been formed by the ministries of shipping, textiles, energy, telecommunications, renewable energy and SMEs to examine systemic issues affecting the viability and reimbursement capacity of sectors. After a complete overhaul of the banking system as part of the government`s 4R approach to recognition, resolution, recapitalization and reforms, the proposed recapitalization would allow banks to develop a financially above-global standards.

In this context, it is relevant that India`s capital standards for banks should be 1% higher than the standards recommended under the Basel III global framework. Unlike the early intervention regime of other major economies, India`s ACP framework for weaker banks has higher thresholds, i.e. higher capital thresholds and a net NPA threshold, which continues to incorporate the capital requirement as a result of the provision of AND.

Author: Franck Pertegas

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