Lenders may face the challenge of building a consensus over the restructuring of advances that the RBI has permitted as part of the resolution framework for Covid-19 related stress.

Some bankers anticipate that lenders with smaller exposure may opt out of the scheme instead of signing the inter-creditor agreement (ICA) that will kickstart the restructuring of the advances.

The RBI in its August 6, 2020 framework on restructuring of advances has said that if there are multiple lending institutions with exposure to a borrower, the resolution process shall be treated as invoked in respect of any borrower if lending institutions representing 75 per cent by value of the total outstanding credit facilities and not less than 60 per cent of the lending institutions by number come to an agreement.

If an ICA is not signed within 30 days from the invocation, it will be treated as lapsed and the resolution cannot be triggered again under this framework for the account.

“Our experience is that getting these numbers and subsequently signing the ICA is a big challenge and banks with a smaller share may try to exit,” Partha Pratim Sengupta, MD and CEO of Indian Overseas Bank, said at a CII organised session on Wednesday.

“But banks need to revisit their plans. They need to have one aim to support the corporates where they have already taken exposure and where the accounts are viable,” he said.