Under ICA, incentive for banks lending more than share in resolution plans

Inter-creditor agreement guidelines also protect interests of third-party and exclusive security holders

Lenders stepping in place of their peers to provide additional funding in resolution plans will get priority to cash flows, according to the operational guidelines of the inter-creditor agreement (ICA). It will give banks which are ready to offer additional funding over what is pro rata, priority charge on the cash flows and assets of a borrower.

Under the guidelines, the status of third-party and exclusive security holders is to be protected. The role of asset reconstruction companies (ARCs) in the resolution process, once a plan is signed by 66 per cent of the lenders involved in a transaction, has