Recently the Inter Creditor Agreement ICA was in news to resolve the issue of stressed assets for th...........

Economic Affairs Types of Banks and Banking

Recently, the Inter-Creditor Agreement (ICA) was in news to resolve the issue of stressed assets for the banks. Which of the following statements about the inter-creditor agreement is/are incorrect?

Inter-Creditor Agreement is an agreement among the banks that have dues from a borrower in stress, mandatorily to be signed by all the public, private, foreign banks as well as Non-Banking Financial Companies.
The Agreement has been framed under the aegis of the Reserve Bank of India
Inter Creditor agreement primarily deals with stressed asset greater than 100 crore rupees.
Under the ICA the lead bank under the Lead Bank Scheme will be authorised to formulate the resolution plan which will be presented to all the lenders for their approval.
Once the resolution is approved by the required majority, it shall be binding on all the lenders that are a party to the ICA.

Choose the correct alternative:

1, 2 and 3

2, 3 and 4

3 and 4

1, 2, 3 and 4

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Explanation:

All the above statements are correct explanation for Inter Creditor Agreement.

To state it in simple words it is a big step taken by the key lenders of the country to tackle the menace of non-performing assets (NPA) or bad loans speedily which has breached Rs. 10 lakh crore mark on a more recent basis. The problem of ever-increasing bad loans in the Indian banking system led to the introduction of the Sashakt resolution plan by the government that came up earlier this month. The Sashakt plan besides other things demanded the establishment of an asset reconstruction company or asset management company for managing bad loans.