Bad loans: 24 banks ink new NPA resolution framework

Mumbai, July 23 

Nearly two dozen lenders, led mostly by state-run banks, on Monday signed the inter-creditor agreement (ICA) framework to speed up the resolution of stressed assets which are under Rs 500-crore bracket.

The framework is part of the Project Sashakt (or the report on bad bank submitted early this month), drafted by the Sunil Mehta (non-executive chairman of PNB) committee earlier this month. The other two members of the panel included SBI chief Rajnish Kumar and BoB head PS Jayakumar.

The inter-creditor agreement will serve as a platform for banks and financial institutions, which are fighting a toxic mount of bad loans that is sniffing at 12% of the system now, to come together and take concerted efforts towards resolving dud loans under Rs 500 crore. 

“Today, we’ve got the inter-creditor agreement executed. Most banks have already got their Board approvals, and others are in the process of getting the same. The objective is to use this framework for faster resolution of stressed assets,” Mehta told reporters on Monday.

He said 18 public sector banks led by the SBI, three private sector banks and the Exim Bank signed the framework. Other lenders will also sign the agreement after getting their Board approvals, he added.

Mehta said the objective is to resolve stressed assets fast, and will primarily focus on NPAs in the Rs 50 crore-500 crore bracket as well as in the Rs 500-2,000 crore ticket size, which will be dealt separately though. — PTI

Inter-creditor agreement

• The agreement will serve as a platform for banks and financial institutions, which are fighting a toxic mount of bad loans that is sniffing at 12% of the system
• It will also enable lenders to move expeditiously and protect the interest of all the lenders
• As of March 2018, there were close to Rs 3.10 trillion worth of bad loans in the Rs 50-crore-Rs 500-crore category and Rs 2.10 trillion under Rs 50-crore ticket size

PNB gets Rs 2,816-crore capital infusion 

• PNB on Monday said it has received Rs 2,816 crore as capital infusion from the government via preferential allotment of equity shares
• The preferential allotment of equity shares to government will be made after completing the process of regulatory approvals, Punjab National Bank said