Why in News:

• The Indian Banks’ Association has tweaked the inter-creditor agreement (ICA) that was framed by the Sashakt Committee, to keep it in line with the revised guidelines of the Reserve Bank of India (RBI) on stressed assets resolution.

Details:

• The revised norm had mandated that if there was a default by any lender, all lenders should review the borrower account within 30 days of the default, which is termed ‘review period’, and to chalk out a resolution plan. It has been made mandatory for all the lenders to enter into an ICA within the review period.
• RBI had said ICA must “provide that any decision agreed to by lenders representing 75% by value of total outstanding credit facilities and 60% of lenders by number shall be binding upon all the lenders.”
• As many as 36 banks and financial institutions had endorsed the Sashakt Committee recommendations.
• The revised ICA has been circulated by the IBA to the member banks and financial institutions.

ICA:

• The agreement is part of the proposed Project Sashakt.
• The objective is to use this ICA for faster facilitation of resolution of stressed assets.
• It is aimed at the resolution of loan accounts with a size of Rs. 50 crore and above that are under the control of a group of lenders.