The outlines of the inter-creditor agreement: as in the circular of 7 June, the circular of 6 August also provides for the obligation to implement an inter-creditor agreement (ICA) between the credit institutions and to carry out the ICA within a maximum of 30 (thirty) days from the date of the referral. In cases where the ICA is not executed within 30 (3) days from the date of referral, the appeal is considered void and no further appeal is allowed in accordance with the August 6 circular. Credit rating and fiduciary mechanism: the plan for resolving accounts with an overall commitment of credit institutions of more than 100 crore or more at the time of referral to the resolution process requires an independent assessment of credit quality by a credit rating agency approved by the RBI under the June 7 circular. In addition, in the case of several banking agreements, the borrower and credit institutions are required to enter into a trust agreement with one of the credit institutions with respect to cash flow diversion. Credit institutions enter into a formal agreement to register the duties and responsibilities of the fiduciary administrator and credit institutions, as well as enforcement mechanisms. The Inter-Creditor (ICA) agreement is facing a rejuvenation with the Reserve Bank of India (RBI) to eliminate the blocking of the liquidation of bad assets due to bottlenecks in its work. Continuing the Reserve Bank of India`s (RBI) efforts to relieve the financial stress caused by the Covid 19 pandemic, the RBI issued the circular of 6 August 2020 on the framework of the Covid-19 Related Stress Resolution (6 August 2020). The August 6 circular creates a limited window of opportunity for certain categories of borrowers affected by the Covid-19 pandemic, to allow resolution plans in the type of restructuring, while allowing borrower accounts to maintain their “standard” status. This would be roughly a cover of the RBI circular on the Prudential Framework for Resolution of Stressed Assets of June 7, 2019 (June 7, 2019), which requires a deterioration of the accounts of borrowers restructured under the same management until the satisfactory performance threshold is reached. This exemption is intended to facilitate the recovery of real sectors and to avoid hindering the recovery process and avoiding the resulting risk to financial stability in general.


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