UPSC Prelims 2019 · Question 2 of 99

UPSC Prelims 2019 question on Inter Creditor Agreement Sashakt

What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?

  1. To lessen the Government of India's perennial burden of fiscal deficit and current account deficit
  2. To support the infrastructure projects of Central and State Governments
  3. To act as independent regulator in case of application for loans of Rs. 50 crore or more
  4. To aim at faster resolution of stressed assets of Rs. 50 crore or more which are under consortium lending
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Answer: D. To aim at faster resolution of stressed assets of Rs. 50 crore or more which are under consortium lending

Project Sashakt was proposed by a panel led by PNB chairman Sunil Mehta.

Bad loans of up to Rs. 50 crore will be managed at the bank level, with a deadline of 90 days.

For bad loans of Rs. 50-500 crore, banks will enter an inter-creditor agreement, authorizing the lead bank to implement a resolution plan in 180 days, or refer the asset to NCLT.

Thus, the Inter-Creditor Agreement was aimed at faster resolution of stressed assets of Rs. 50 crore or more which are under consortium lending → Option (d).

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