Recently, Indian banks have signed an inter creditor agreement that aims to resolve the issue of bad loans. This agreement is a significant step towards improving the health of the country`s banking sector, which has been reeling from the effects of the pandemic.
The inter creditor agreement is a framework that provides a mechanism for resolving stressed assets in a time-bound manner. Under this agreement, a lead bank will be appointed to act as a facilitator in resolving the issue of bad loans. The lead bank will be responsible for preparing a resolution plan that will be presented to the other creditors. Once the plan is approved, the lead bank will implement the resolution plan.
This agreement is a much-needed step towards strengthening the banking sector in India. The issue of bad loans has been a major concern for the industry for a long time, and this agreement provides a structured approach to resolving the issue. It will ensure that all the creditors are on the same page and work towards a common goal.
Furthermore, the inter creditor agreement will also help to improve the chances of recovery for stressed assets. The timely resolution of bad loans will help to minimize the losses incurred by the banking sector and improve the overall financial health of the industry.
In conclusion, the inter creditor agreement signed by Indian banks is a positive development that will help to address the issue of bad loans. It provides a framework for a more structured and efficient approach towards resolving stressed assets. This agreement is a step towards strengthening the banking sector and improving the overall financial health of the industry.