IBA Decides On Inter-Creditor Agreement For Bad Loan Resolution

As per the presentation made by Indian banks to the finance ministry the inter-creditor agreement has been finalized which will aid faster resolution of stressed assets.

On Thursday the IBA met so as to discuss the agreement that will authorize the lead banker to implement a resolution proposal for NPAs under Sashakt scheme which relates to bad loans amounting in the range of Rs. 50- 500 crore.\

Sunil Mehta, non executive chairman of PNB, further stated that the inter-creditor agreement shall be in place from this month. The lead bank

ith higher exposure to stressed assets will be entrusted with the responsibility and thereafter other banks will be informed about the progress.

Under the inter-creditor arrangement, the lead banks will work out the resolution plan that includes appointment of industry experts and specialists for turning around stressed assets within the given time frame and implement the resolution plan in 180 days.
"This is a very participative process (and) makes sure there is effective, good communication among banks," Mehta said.

IBA will also engage in the process of appointing independent screening committee for validating process in a month's time and the resolution process will be initiated in case banks holding 66% debt give their go-ahead. Upon, approval, the lead bank will be responsible for the resolution of stressed assets.

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