Inter Creditor Agreement

Subject – Economy

Context – RCF: Authum resolution plan gets debenture holders nod

Concept –

ICA is an agreement among banks that have dues from a borrower in stress. The pact mandates the lead bank to formulate a resolution plan that will be executed in a time bound manner.
It was framed under the aegis of Indian banks association, following the recommendation of Sunil Mehta Committee on stressed assert resolution.
Around 22 public sector banks (including India Post Payments Bank), 19 private lenders and 32 foreign banks signed the inter-creditor agreement (ICA) to fast track the resolution of stressed assets.
Applicability – The ICA is applicable to all corporate borrowers who have availed loans for an amount of 50 crore or more under consortium lending / multiple banking arrangements.
The agreement is part of the proposed Project Sashakt.
- “Sashakt” plan is approved by the government to address the problem of resolving bad loans.
The objective is to use this ICA for faster facilitation of resolution of stressed assets.