Mutual funds can be part of inter-creditor agreement, clarifies RBI

Reserve Bank of India underlines importance of looking at liabilities of stressed assets comprehensively

The Reserve Bank of India (RBI) on Wednesday clarified that it had no issues with mutual funds (MFs), or other set of creditors, participating in the inter-creditor agreement (ICA) process, in cases where a portion of the outstanding debt is lent by non-bank entities.

"When the banks dealt with individual cases, they found that a good portion of the outstandings of individual entities were from insurance companies, mutual funds and others. When you have an ICA that covers only 50-60 per cent of the outstanding of the company, then you are not doing anything about the remaining 40-50 per cent.