FIBAC 2018: No change in inter-creditor agreement, says Sashakt panel chief

There will not be any change in ICA document. IBA will issue operational guidelines, says Sunil Mehta

The inter-creditor agreement (ICA) signed by over 30 lenders for resolving big-ticket stressed assets will stay intact. Any fine-tuning will be done in the operating guidelines for ICA at a later date.

Sunil Mehta, who heads the panel for resolution of stressed loans, said the ICA has been framed after extensive legal consultation. The project for resolution of stressed assets has been named Sashakt.

There will not be any change in the ICA document. The Indian Banks’ Association will issue operational guidelines. These operational guidelines will specify the timelines for the processes, including voting on the resolution plan.

Over 30 lenders – public sector banks (PSBs), private sector lenders, and financial institutions - have signed the ICA and they account for about 85 per cent of exposure to stressed loans.

Sashakt panel member and State Bank of India (SBI) deputy managing director (global markets) C V Nageswar said the operating guidelines (for ICA) in the draft form will be ready by the middle of next week to be circulated amongst the signatories. After the lenders’ approval, these norms will be applicable from September.  

Besides Mehta and Nageswar, SBI Chairman Rajnish Kumar, Bank of Baroda Managing Director and Chief Executive Officer P S Jayakumar are also part of the committee, which submitted its report to Finance Minister Piyush Goyal on July 2.

Nageswar said that there could be sectoral funds for textiles, steel, and infrastructure. For making funds viable, there has to be at least four large assets from the sector.

The committee has estimated a capital to support the haircut in the range of Rs 400-450 billion by resolving loans through an asset management company or an asset restructuring company.

Capital worth about Rs 500 billion will be required for PSBs to invest in alternative investment funds (AIFs), it said.

Apart from the additional capital, the panel has also sought some regulatory approvals to implement the plan. The panel has recommended seeking special dispensation from the Securities and Exchange Board of India to exempt AIFs from making an open offer under the takeover code.