Nearly two dozen lenders, led mostly by state-run banks, have signed the inter-creditor agreement (ICA) framework to speed up the resolution of stressed assets which are under Rs 500-crore bracket.
The framework is part of the Project Sashakt (or the report on bad bank submitted early this month), drafted by the Sunil Mehta (non-executive chairman of PNB) committee earlier this month, reported PTI.
The other two members of the panel included SBI chief Rajnish Kumar and BoB head PS Jayakumar, the report said.
The inter-creditor agreement will serve as a platform for banks and financial institutions, which are fighting a toxic mount of bad loans that is sniffing at 12% of the system now, to come together and take concerted efforts towards resolving dud loans under Rs 500 crore, it added.
“Today, we’ve got the inter-creditor agreement executed. Most banks have already got their Board approvals, and others are in the process of getting the same. The objective is to use this framework for faster resolution of stressed assets,” Mehta was quoted as saying in the report.
He said 18 public sector banks led by the SBI, three private sector banks and the Exim Bank signed the framework. Other lenders will also sign the agreement after getting their Board approvals, he added.
Mehta reportedly said the objective is to resolve stressed assets fast, and will primarily focus on NPAs in the Rs 50 crore-500 crore bracket as well as in the Rs 500-2,000 crore ticket size, which will be dealt separately though.
The agreement will serve as a platform for banks and financial institutions, which are fighting a toxic mount of bad loans that is sniffing at 12 per cent of the system, reported PTI
It will also enable lenders to move expeditiously and protect the interest of all the lenders, the report said.
As of March 2018, there were close to Rs 3.10 trillion worth of bad loans in the Rs 50-crore-Rs 500-crore category and Rs 2.10 trillion under Rs 50-crore ticket size, it added.