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What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently

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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 nd 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

Answer:

(d)

Moderate

Core Books

CA

Explanation

Project Sashakt was proposed so that bad loans of up to Rs. 50 crore will be managed at the bank level with a deadline of 90 days. for bad loans of Rs.50- 500 crore, banks will enter an inter-credit agreement, authorizing the lead bank to implement a resolution plan in 180 days, or refer the asset to NCLT. For loans above Rs. 500 crore, the panel recommended an independent AMC, supported by institutional funding through the AIF. The idea is to help consolidate stressed assets.