In its circular, the RBI stated that, in cases where a resolution plan was to be implemented, all lenders in a consortium should participate in an ICA within 30 days of the review period. In a July 2018 ICA abandonment, where a … The ICA applies to borrowers for whom the outstanding of participating lenders is greater than 50 INR or who may be directed to the settlement of the debt under the ICA by majority lenders or the revised framework. It should be noted that the outstanding for the purposes of the ICA is limited to the principal outstanding and does not involve interest or other charges on the loans. In addition, the INR 50 Crore Lending Committee at INR 500 Crore recommended a bank-managed resolution approach, which would include the creation of an independent oversight committee to review the settlement of these loans within 180 days and, if there is no solution within 180 days, proceedings must be initiated against such a borrower under the CWB. From the date of the transfer of the borrower to the resolution, until the expiry of 180 days from the date of the default or the schedule prescribed in the revised framework or other applicable laws, the civil action brought against the borrower and other debtors remains motionless. The leader and other lenders should work in such a way that the borrower`s account is exhausted, for which they should consult, cooperate and work together. A resolution plan would only be considered “implemented” if the borrower is no longer late and the plan involves restructuring, if all documents, guarantees and perfection are completed and the new capital structure/modification is reflected in the accounts of lenders and borrowers. The prudential framework was designed to strengthen and enhance the credit culture and promote a strong and resilient financial system in India.
It aims to address the concerns expressed by the Indian Supreme Court in Dharani Sugars, including by highlighting incentive structures in relation to the mandatory insolvency of large borrowers.