The inter-creditor agreement (ICA), known to have been signed by 33 institutions so far, is likely to become operational by mid-October, said Sunil Mehta, non-executive chairman, Punjab National Bank, and head of the committee whose recommendations formed the core of Project Sashakt. Project Sashakt is a five-pronged strategy for the resolution of the stress in the banking sector. One of its components was the ICA, whose signatories include all the public-sector banks and at least two private banks, ICICI Bank and Axis Bank. In September, operating guidelines for lead lenders were circulated among banks. Thereafter, some banks had sought clarifications on the guidelines, which were duly issued to them, Mehta said.
“Whoever had sought clarifications, we had a meeting with them and sorted it out… so, the process is certainly moving ahead,” he added. The next step would be for banks, which have signed on to the ICA, to reconfirm to the Indian Banks’ Association that they have received and reviewed the operating guidelines.
“Since that is in progress and clarifications have already been provided, I expect the whole element – the ICA – to become operational by the middle of October. That is my assessment,” Mehta said. While the February 12 circular of the RBI prescribes the framework for the resolution of stressed accounts of Rs 2,000 crore or more, the ICA was devised to enable the resolution of smaller accounts. Since there are multiple banks involved in many such accounts, the ICA is expected to allow them to move more efficiently towards a resolution plan in line with the IBC guidelines as well as the February 12 circular.