What was the purpose of Inter Creditor Agreement signed by Indian banks and financial institutions r...........

Indian Economic System(CSC) Money and banking

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

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UPSC CSP Previous Year Paper (2019)

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To lessen the Government of India’s perennial burden of fiscal deficit and current account deficit

To support the infrastructure projects of Central and State Governments

To act as independent regulator in case of applications for loans of Rs. 50 crore or more

To aim at faster resolution of stressed assets of Rs. 50 crore or more which are-under consortium lending

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Explanation:

The inter-creditor agreement gives more powers to the lead lender in a consortium and allows a resolution plan to be approved if 66 percent of the banks in the group agree to it.

The inter-creditor agreement is aimed at the resolution of loan accounts with a size of ?50 crore and above that are under the control of a group of lenders.

In a bid to ensure swift resolution of non-performing assets, around 22 public sector banks (including India Post Payments Bank), 19 private lenders and 32 foreign banks on Monday signed the inter-creditor agreement (ICA) to fast track the resolution of stressed assets.

It is part of the “Sashakt” plan approved by the government to address the problem of resolving bad loans.