INSUBCONTINENT EXCLUSIVE:
As of March, there were close to Rs 3.10 lakh crore worth of NPAs in the Rs 50 crore-500 crore categoryMumbai: Nearly two dozen lenders, led
mostly by state-run banks, on Monday signed the inter-creditor agreement (ICA) framework to speed up the resolution of stressed assets which
are under Rs 500 crore bracket
The faremwork is part of Project Sashakt, a report on bad loans drafted by a committee headed by Sunil Mehta, non-executive chairman of PNB
financial institutions, which are fighting a toxic mount of bad loans that is sniffing at 12 per cent of the system now, to come together
and take concerted efforts towards resolving dud loans under Rs 500 crore
It will also enable lenders to move expeditiously and protects the interest of all the lenders."Today, we've got the inter-creditor
Most banks have already got their board approvals,and other are in the process of getting the same
The objective is to use this framework for faster resolution of stressed assets," Mr Mehta told reporters on Monday.He said 18 public sector
banks led by SBI, three private sector banks and Exim Bank signed the framework
and we are hopeful that by and large by this will be signed by all banks," Mr Mehta said, adding that so far, no foreign banks has signed
the agreement as they have to get board approvals."In the case of foreign banks they have to go to their head offices for approvals
It is a tedious process for them to fully understand the regulations on this matter
I am quite confident that they will be able to get approvals," he said.Mr Mehta 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.As of March 2018, there were close to Rs 3.10 lakh crore worth of bad loans in the Rs 50 crore-500 crore category and Rs
2.10 lakh crore under the ticket size of Rs 50 crore.The framework will deal separately with stressed assets of over Rs 2,000 crore, Mr
Mehta added.He said the agreement in letter and spirit is in conformity with the February 12, 2018 RBI circular but the ICA framework will
be a master agreement applicable on all stressed assets going forward.Under the framework, the lead lender shall be authorised to formulate
the resolution plan, which shall be presented to the other lenders for their approval.The decision making shall be by way of approval of
majority lenders, that is, the lenders with 66 per cent share in the aggregate exposure
Once a resolution plan is approved by the majority, it shall be binding on all the lenders that are a party to the inter-creditor
agreement.The framework also has a provision for dissenting lenders, which gives them an option to buy the asset or if they want they can
sell it at a 15 per cent discount."From here on,responsibility that goes to the lead banks to be able to find a resolution plan that is
going to be supported and is going to be the most appropriate resolution which is required for the stressed assets," Mr Mehta said.Talking
about the proposed AMC/alternative investment fund, Mr Mehta said discussions are on with different funds which have shown interest in
participating in the fund."There has been conversations with some institutions which are willing to take the lead on that," he said without
giving any further information.
