What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?
Correct Answer D. To aim at faster resolution of stressed assets of Rs 50 crore or more which are under consortium lending
Explanation
Option D is correct: The Inter-Creditor Agreement (ICA) was framed under the aegis of the Indian Banks’ Association (IBA) following the recommendations of the Sunil Mehta Committee (Project Sashakt):
– It aimed at the speedy and coordinated resolution of stressed assets of 50 crore rupees or more that were subject to consortium or multiple banking arrangements.
– Under the pact, the lead lender draws up a resolution plan, which becomes binding on all consortium members if approved by lenders holding 66% of the aggregate debt value.
Therefore, the purpose was Option D.