gs1medium
What was the purpose of the Intercreditor Agreement signed by Indian banks and financial institutions recently?
- A.To lessen the Government of India’s perennial burden of fiscal deficit and 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 & Explanation
Correct answer: D. To aim at faster resolution of stressed assets of Rs 50 crore or more which are under consortium lending.
The Intercreditor Agreement was introduced as part of the Reserve Bank of India's (RBI) framework for resolving stressed assets. It specifically targets loans where multiple banks have lent to a single borrower (consortium lending) and aims to expedite the process of addressing these non-performing assets (NPAs). By establishing a common set of terms and conditions for all lenders involved, it facilitates a quicker decision-making process for restructuring or resolving the stressed loan.
Source: UPSC gs1 2019