What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?
Detailed Explanation:
Answer: Option 4 — To aim at faster resolution of stressed assets of Rs. 50 crore or more which are under consortium lending
The Inter-Creditor Agreement (ICA) was introduced as part of Project Sashakt (based on the Sunil Mehta Committee recommendations) to expedite the resolution of Non-Performing Assets (NPAs) in the Indian banking system. Under the ICA, if 66% of lenders by value agree to a resolution plan for stressed assets of ₹50 crore or more under consortium lending, the decision becomes binding on all lenders. This mechanism prevents individual dissenting banks from blocking recovery efforts, thereby enabling faster turnaround of bad loans and improving the health of the banking sector.
Question 1 of 4 Banking Reforms
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First question in this topic
With reference to the governance of public sector banking in India, consider the foll...