Banks are also concerned about obstacles to signing Inter-Creditor (ICAs) agreements for the settlement of accounts. A senior bank official told the FE that it would be difficult to reach consensus among lenders in a short period of time. Banks must take advantage of the resolution plan by December and an inter-creditor pact must be signed for all accounts on which there is more than one lender. Any lender that does not sign ICA must make up 20% additional provisions. The Business Standard reports that 24 lenders, led by SBI and PNB, signed an agreement between creditors on Monday to speed up the liquidation of the most stressed assets of 500 million euros in syndicated loans. Since creditors are unable to agree on the purchasers or the restructuring mechanism, it often takes several weeks to reach consensus. The last ICA signing date was January 7 for loans of more than 2,000 kronor. The banks had asked the regulator to extend the period by three months so that cases about to be settled would not be referred to the NCLT. For example, Acme Coal Co. imports coal. Energen Inc. provides energy to consumers.
Both companies agreed to build a power plant to achieve their respective objectives. As a general rule, the first step would be to sign a Memorandum of Understanding that would set out the intentions of both parties. This would be followed by an agreement on the creation of a joint venture. Indian banks trying to sell their troubled assets now have one less hurdle to overcome. A group of banks, including the public sector, the private sector and foreign banks, signed an agreement between creditors on Monday to push for the rapid resolution of bad debts on their balance sheets. Under the agreement, a majority representing two-thirds of loans in a consortium of lenders should be sufficient to remove any objections to the dissenting lenders` resolution process. Minority lenders who suspect that they are short-circuited by other lenders can now either sell their assets to a willing buyer for a discount or buy loans from other lenders for a premium. The agreement between creditors aims to liquidate credit accounts of 50 crore or more in size, under the control of a group of lenders. It is part of the government-approved “Sashakt” plan to address the problem of solving non-performing loans. In recent years, Indian banks have been forced by the Reserve Bank of India to identify problematic assets in their books, but their resolution has remained a challenge. According to banker Sunil Mehta, who headed a body that recommended the plan, disagreement between joint lenders is the main problem to resolve stressed assets. The government hopes that the problem of the holdout, for which the objections of some lenders prevent an agreement between the majority lenders, will be solved by the agreement reached between the creditors.
The interbank agreement plays a central role in the right to pledge. It is therefore essential that both lenders establish a solid foundation for their rights and priorities in the event of a borrower`s financial capacity failure and late payment. In the absence of such a document, each party can make its own decisions and be inconsistent.