<p>At least 20 public sector banks on Monday signed the Inter Creditor Arrangement (ICA) aimed at faster resolution of bad loans.</p>.<p class="bodytext">Finance Minister Piyush Goyal, who was instrumental in setting up such a body, called it a “historic move”.</p>.<p class="bodytext">Inter Creditor Agreement is a framework under which, a consortium of lenders take up cases of non-performing assets (NPAs). The framework authorises the lead bank to prepare a resolution plan and implement it within 180 days.</p>.<p class="bodytext">Among the banks that signed the agreement are State Bank of India, Union Bank of India, Bank of Baroda, South Indian Bank, and Syndicate Bank.</p>.<p class="bodytext">Under ICA, if 66% of lenders who have exposure to bad loans, take a decision, they can go ahead with the loan restructuring proposal. The dissenting banks have the option to sell their loan to a lead bank at a discount of 15%.</p>.<p class="bodytext">The banks can also sell their loans to other lenders and non-banking financial corporations.</p>.<p class="bodytext">“The objective is to use this Inter Creditor Agreement for faster facilitation of the stressed assets resolution," said Sunil Mehta, the Non-Executive Chairman of Punjab National Bank, who headed the government panel on ICA.</p>.<p class="bodytext">The NPAs of banks have increased from Rs 2.6 lakh crore in 2013-14, to Rs 10 lakh crore in 2018. Most of the bad loans have increased due to a tardy resolution plan and piling of interest.</p>
<p>At least 20 public sector banks on Monday signed the Inter Creditor Arrangement (ICA) aimed at faster resolution of bad loans.</p>.<p class="bodytext">Finance Minister Piyush Goyal, who was instrumental in setting up such a body, called it a “historic move”.</p>.<p class="bodytext">Inter Creditor Agreement is a framework under which, a consortium of lenders take up cases of non-performing assets (NPAs). The framework authorises the lead bank to prepare a resolution plan and implement it within 180 days.</p>.<p class="bodytext">Among the banks that signed the agreement are State Bank of India, Union Bank of India, Bank of Baroda, South Indian Bank, and Syndicate Bank.</p>.<p class="bodytext">Under ICA, if 66% of lenders who have exposure to bad loans, take a decision, they can go ahead with the loan restructuring proposal. The dissenting banks have the option to sell their loan to a lead bank at a discount of 15%.</p>.<p class="bodytext">The banks can also sell their loans to other lenders and non-banking financial corporations.</p>.<p class="bodytext">“The objective is to use this Inter Creditor Agreement for faster facilitation of the stressed assets resolution," said Sunil Mehta, the Non-Executive Chairman of Punjab National Bank, who headed the government panel on ICA.</p>.<p class="bodytext">The NPAs of banks have increased from Rs 2.6 lakh crore in 2013-14, to Rs 10 lakh crore in 2018. Most of the bad loans have increased due to a tardy resolution plan and piling of interest.</p>
