RBI has informed that Supreme Court, vide its order dated 2.4.2019, held and said circular as non-est, necessitating issue of a revised circular for expeditious and effective resolution of stressed assets. RBI has further informed that against this background, RBI on 7.6.2019 has issued ‘Prudential Framework for Resolution of Stressed Assets’ for early resolution of stressed assets in a transparent and time-bound manner, giving complete discretion to lenders with regard to design and implementation of resolution plans, while providing for disincentives in the form of additional provisioning for delay in implementation of resolution plan or initiation of insolvency proceedings, and making mandatory the signing of an inter-creditor agreement.
As per Indian Banks’ Association (IBA), the Prudential Framework issued by RBI vide the circular dated 7.6.2019 has made signing of inter-creditor agreement mandatory before working out the resolution proposal for a particular stressed account and in this connection, IBA has drafted an agreement and circulated the same among its member banks to facilitate the resolution process. IBA has further apprised that this draft agreement is not with reference to any particular sector. A number of steps have been taken by the Government to help revive stalled projects.
