PFC board approves plan to join ICA to deal with stressed assets

State-owned PFC today said its board has approved the decision to join inter-creditor agreement with a view to expeditiously deal with the stressed assets.

"...the board of directors, Power Finance Corporation Ltd, in its meeting held today i e on July 24, 2018 has inter-alia approved PFC's joining the said ICA (inter-creditor agreement)," it said in a BSE filing.

Banks and FIs, including SBI and LIC, had yesterday entered into an overarching inter-creditor agreement (ICA) to fast track the resolution of stressed assets, with Finance Minister Piyush Goyal describing the move as a 'huge step forward' in addressing the banking industry's problems.

 

The ICA is being signed by 22 public sector banks (including India Post Payments Bank), 19 private sector banks and 32 foreign banks. Besides, 12 major financial institutions (FIs) and intermediaries, like LIC, HUDCO, PFC and REC, are also signatories to the pact.

It will cover cases of stressed assets worth at least Rs 50 crore under consortium lending.

Goyal had said that several others, including the ICICI Bank would be joining the agreement after seeking the board approval.

ICA was drawn up by banks themselves and is a reflection of bankers' resolve to collectively find a solution to the problems of the banking sector, he had said.

ICA, which has been drawn up by the banks themselves, is truly a reflection of the consciousness that has now come into the Indian banking system, the minister had said.

He had said that there were often occasions that a good resolution plan, which would have helped saved jobs, save national assets and recover large amounts of loans, were held up by one or two creditor for months and years, thereby eroding value of the banking system.

Under the ICA, which is part of project 'Sashakt', each resolution plan will be submitted by the lead lender to an Overseeing Committee.

As per the ICA, "The lead lender, that is the lender with the highest exposure, shall be authorised to formulate the resolution plan, which shall be presented to the lenders for their approval".