Resolution of bad assets: RBI set to recast inter-creditor agreement

New framework likely to be introduced even before default happens

The inter-creditor agreement (ICA) is in for a makeover with the Reserve Bank of India (RBI) weighing options to clear the logjam in the resolution of bad assets due to bottlenecks in its working.

Among the aspects that can be looked into by the central bank is the feasibility of weaving the ICA right from the start of a relationship within consortiums and multiple banking arrangements, so that there is visibility on what needs to be done when an account defaults or faces difficulty. 

“This is to ensure that relative access to security and its seniority is laid out a priori,” said