What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?
A
To lessen the Government of India's perennial burden of fiscal deficit and current account deficit
B
To support the infrastructure projects of Central and State Governments
C
To act as independent regulator in case of applications for loans of Rs. 50 crore or more
D
To aim at faster resolution of stressed assets of Rs. 50 crore or more which are under consortium lending
Correct Answer
Explanation
The Inter-Creditor Agreement (ICA) was introduced as part of the "Sashakt" plan to ensure the time-bound resolution of stressed assets worth ₹50 crore or more by making a resolution plan binding if 66% of lenders by value agree. Option (c) is incorrect because the ICA is a contractual framework for consensus among existing lenders rather than an independent regulatory authority. The core concept tested is the mechanism for managing Non-Performing Assets (NPAs) and the institutional reforms aimed at resolving the banking sector's bad loan crisis.
Indian EconomyBanking Sector Reforms / Non-Performing Assets (NPAs)Inter-Creditor AgreementIndian banksfinancial institutionsstressed assetsconsortium lendingresolution