Inter-Creditor Agreement Banks
Question
What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?
Options
To lessen the Government of India's perennial burden of fiscal deficit and current account deficit
To support the infrastructure projects of Central and State Governments
To act as independent regulator in case of applications for loans of 50 crore or more
To aim at faster resolution of stressed assets of 50 crore or more which are under consortium lending
Explanation
The Inter-Creditor Agreement (ICA) signed by Indian banks and financial institutions was designed to provide a framework for faster resolution of stressed assets under consortium lending arrangements. The agreement aims to streamline the process of restructuring or recovery of loans worth 50 crore or more that are lent jointly by multiple financial institutions. This helps prevent unnecessary delays caused by disagreements among creditors regarding resolution strategy. Option a relates to fiscal policy, option b to infrastructure support, and option c misidentifies the regulator's role. > ICA accelerates stressed asset resolution in consortium lending through coordinated creditor action. Answer: d.
Question details
Year
2019
Paper
GS Paper 1
Question
Q72
Subject
Economy
Sub-topic
Banking and Finance
Type
Factual single
Difficulty
Medium
Nature
Current-affairs-linked
Source hint
Current Affairs 2018-2019
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