Iba Draft Intercreditor Agreement

Following the Reserve Bank of India (RBI) circular of 7 June, the Association of Indian Banks (IBA) drew up an agreement between creditors (ICA) to define the basic rules for the resolution of over-the-counter assets. All lenders must sign the agreement between creditors in accordance with the new RBI guidelines, subject to a board decision. The IBA has now designed the ICA in agreement with Cyril Amarchand Mangaldas, who also debated the ICA recommended by the Sashakt committee. The ICA project was released following several consultations between the IBA and lenders, including a meeting recently closed on Saturday. A senior IBA official said: “We have released the revised ICA so that bankers can immediately start working on some cases. Irrespective of the signatories of the former ICA, all banks will sign the facts on a case-by-case basis. As soon as the revised master`s letter expires, all interested banks will sign the agreement. The document also states that lenders whose credit facilities are not denominated in Rube, but who wish to become parties to the agreement, need appropriate authorizations and authorizations from the relevant government authority, including the RBI. Or the lender could enter into any other agreement, including the refinancing of its loans with loans denominated in Indian rupees, on the basis of what is necessary for the effective implementation of a resolution plan. The new agreement replaces the ICA for the settlement of the most stressed assets of July 23, 2018 and “could be accepted by lenders on a case-by-case basis,” says a letter from the IBA attached to the revised ICA project. The Indian Banks` Association has adapted the Inter-Creditor Agreement (ICA) described by the Sashakt Committee to bring it into line with the Reserve Bank of India`s (RBI) revised guidelines on the dissolution of stressed assets announced on June 7.

On 12.2.2018, the Reserve Bank of India (RBI) issued a revised Framework. The RBI reported that, in its decision of 2.4.2019, the Supreme Court referred to the above circular as non-is, which necessitated the issuance of a revised circular for the prompt and effective resolution of stressed assets. The RBI also reported that, in this context, on 7.6.2019, the RBI published a “Prudential Framework for Resolution of Stressed Assets” for the rapid settlement of the most stressed assets in a transparent and temporal manner, giving lenders full latitude in the design and implementation of resolution plans, while providing additional provisions to delay the implementation of the resolution plan or the opening of an insolvency procedure and by making agreement between creditors.

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