Banks seek clarity on inter-creditor agreement rejig - Today's Paper News, Breaking News, Top headlines, Latest Breaking News, Breaking News
loading...

Latest New Breaking News Today, National, World, Indian News Fast, English News Breaking, Latest English News, Breaking News, Read the Latest News On Business, Politics, Sports, Cream, Top Story, Cricket, Sports, Entertainment & Much More From India And Around The World, breaking news,city news,India news,international news,latest news,national news,world news,latest national news,breaking world news,trending news,current news,latest news India

Breaking News

Home Top Ad

Post Top Ad

Responsive Ads Here

Thursday, June 13, 2019

Banks seek clarity on inter-creditor agreement rejig

MUMBAI: Banks are in a fix over the Reserve Bank of India’s (RBI) revised circular addressing resolution of stressed assets which insists on an inter-creditor agreement (ICA) to start any process. While 37 banks have already signed an ICA last year when the government wanted a mechanism to resolve the power sector distress, the latest one has put a couple of new clauses which may have to be incorporated.Bankers aren’t clear whether the new clauses will mean that the whole ICA agreement, as it stands today, will need to be rewritten or the new clauses will have to be inserted and the agreement have to be newly signed.“ICA is now mandatory, that is clear. Logically it looks like they will have to modify the master ICA agreement. But we are still not clear. The Indian Banks’ Association (IBA) will most probably seek a clarification on this and we will go by whatever they say,” said a senior executive with a public sector bank which is among the 37 banks which have signed the ICA already.A senior IBA official said that the industry group will approach the central bank to formulate what changes that need to be made. “One option for us it to have a master agreement like the one signed by 37 banks as of now and then let them work on resolutions on a case-by-case basis. The other way is to make banks sign a new 25-page document each time they start a resolution process. We are taking legal and regulatory opinion on whether this master circular will work or we need to modify it,” this IBA official said.Legal experts said the ICA in its current form will have to reworked, but they do not see the need for a brand new agreement. "The existing Sashakt ICA will have to incorporate two main changes from the new RBI circular which requires approval of 76% of lenders by value and 60% by number to take decisions. Earlier, the voting threshold was 66% by value (similar to IBC). The new circular also provides for protection for dissenting creditors by providing for liquidation value. All banks, term financial institutions, systemically important NBFCs, deposit-taking NBFCs and ARCs will have to sign the revised ICA," said L Vishwanathan, partner, finance & projects practice at Cyril Amarchand Mangaldas.

from Economic Times http://bit.ly/2XG85wA

No comments:

Post a Comment

Post Bottom Ad

Responsive Ads Here