Indian banks and financial institutions (FIs) on Monday entered into an inter-creditor agreement (ICA) to expedite the resolution of banks' non-performing assets (NPAs), or bad loans, and ensure smooth credit flow, acting Finance Minister Piyush Goyal said.
The agreement, as suggested by a committee headed by state-run Punjab National Bank (PNB) Chairman Sunil Mehta, is a "huge step forward" towards resolving the stressed assets issue and has been worked out under the Insolvency and Bankruptcy Code (IBC), Goyal told reporters here on the sidelines of a convention here organised by the Confederation of All India Traders (CAIT).
"Almost the entire banking system and prominent NBFCs (non-banking finance companies) like REC, PFC are joining the ICA which has held back fast and effective resolution of stressed assets for decades in the past.
"This is a huge step forward. It is a historic occasion for the banking system and is absolutely not a parallel system. This is within the framework of IBC that the entire process has been worked out and it will help in faster resolution within extant guidelines and rules," he said.
The ICA is being...