Sunil Mehta recommends changes in existing Inter-Creditor Agreement (ICA)

The Sashakt Committee, headed by PNB non-executive chairman Sunil Mehta, has recommended changes in existing Inter-Creditor Agreement (ICA) to incorporate revised voting threshold and other changes for decision making stipulated by the Reserve Bank of India (RBI). It will enable expeditious implementation of the new framework on stressed assets. Under the RBI’s new framework, it is a mandatory requirement for lenders to enter into an Inter-Creditor Agreement (ICA) during the review of the borrower account within 30 days from date of first default to any lender. The New Framework further lays down some parameters to be included in the Inter-Creditor Agreement including decision-making by lenders holding 75% (by value of total outstanding facilities) and 60% by number and protection of dissenting lenders. The Inter-Creditor Agreement is required to be executed by all lenders covered under the New Framework and asset reconstruction companies. The New Framework applies to all banks, term financial institutions, small finance banks, systemically important non-deposit taking non-banking finance companies (NBFCs) as well as deposit taking NBFCs.