IBA drafts new inter-creditor agreement for resolution of stressed assets

According to the new RBI norms, banks will have a "grace period" of 30 days to think of a plan after a "default" and a further 180 days to execute the plan

Indian Banks’ Association (IBA) has drawn up an inter-creditor agreement (ICA) to establish the ground rules for the resolution of stressed assets, following the Reserve Bank of India’s (RBI)’s June 7 circular. All lenders will have to compulsorily sign the inter-creditor agreement, according to the fresh RBI guidelines, subject to a board resolution.
 
The RBI in its circular had stated that in cases where a resolution plan is to be implemented, all lenders in a consortium must enter an ICA within 30 days of the review period.
 
In a departure from the July 2018 ICA, where a majority