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Last Updated : May 19, 2020 12:22 PM IST | Source:

SBI proposes uniform inter-creditor agreement norms for faster loan restructuring: Report

The Reserve Bank of India (RBI) has granted on term loans whose instalments are due between March 1 and May 31.

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State Bank of India (SBI) has recommended a uniform inter-creditor agreement (ICA) framework among lenders to fast track loan restructuring process.

A uniform agreement will essentially specify broad guidelines for restructuring loans to be followed by all banks.

This is being considered given many borrowers affected by the coronavirus crisis may ask banks to restructure their loans, and lenders need to arrive at a consensus for at least a year-and-a-half, according to an Economic Times report.


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"If all banks are not on the same page on the restructuring of a loan, the process would be delayed. This should be avoided. Against this background (SBI chairman) Rajnish Kumar suggested an 'omnibus inter-creditor agreement' (ICA)," a source told the publication.

Moneycontrol could not independently verify the story.

The idea of a uniform ICA framework had been considered earlier but due to lack of a consensus, each bank began taking up loan restructuring on a case-to-case basis.

India is currently in a nationwide lockdown, which began on March 25, to contain the spread of COVID-19.

"The restructuring plan should be simple and easily implementable. If one tries to find the financial viability of a company in a conventional way..., it would not be a meaningful exercise. One will end up making unrealistic assumptions which would collapse later," a banker told the paper.

The Reserve Bank of India (RBI) has granted on term loans whose instalments are due between March 1 and May 31.

The banking industry is hoping the RBI permits them to restructure loans without classifying them as non-performing assets (NPAs), the report said.

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First Published on May 19, 2020 12:22 pm
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