Manjusha Rajas Johari

Inter-Creditor Agreement Signed by Indian Banks and Financial Institutions Recently

Recently, several Indian banks and financial institutions signed an inter-creditor agreement to resolve the issue of bad loans and non-performing assets (NPAs) in the country. The agreement aims to speed up the resolution of stressed assets and reduce the burden on the banking sector.

The inter-creditor agreement is a much-needed step in the right direction for the Indian banking sector. India`s banks have been grappling with a huge pile of NPAs, which has been impacting their profitability and putting a strain on the entire financial system. This agreement will help them to work together and resolve the issue more efficiently.

Under the agreement, a lead bank will be appointed for each stressed asset, which will be responsible for the resolution process. The lead bank will prepare a resolution plan within a maximum of 180 days from the initial default and share it with other lenders for their approval. The plan will be deemed to be approved if it receives the support of 75% of the creditors by value and 60% by number.

This agreement is a significant step forward for the Indian banking sector, as it will help in the speedy resolution of stressed assets, which will, in turn, help in reducing the NPA burden on banks. The agreement will also help to improve the overall health of the banking sector, which is crucial for India`s economic growth.

In conclusion, the inter-creditor agreement signed by Indian banks and financial institutions is a crucial step towards resolving the issue of bad loans and NPAs in the country. The agreement will help the banks to work together efficiently and speed up the resolution process. This will not only reduce the burden on the banking sector but also contribute to the overall growth of the Indian economy.

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