The junior lender should consider meeting the contractual terms for the project in the event of a delay in payment from the borrower. In the event of such a situation, the junior lender should be aware that there are usually only two options: either to inject funds into the project, to remedy financial defaults under the senior lender, or to pay the priority lender. This last point is often almost impossible in cases where the priority lender has provided very large financing. As a general rule, each party should be informed of the critical elements of the agreement for each act signed by two or more parties. It is therefore necessary for a junior lender to reach a clear ground before the transaction begins and identify the fundamental issues as follows: “… Finally, we have the banks that recognize the importance of cooperation as a team to work together to find a solution to the banking problem and ensure an orderly flow of credit in the future, so that we do not have to see the kind of problems that we inherited in 2014 with respect to a large number of NMAs, which cost the nation dearly and that have affected India`s credibility and have damaged the credibility of India. India. “,” Goyal said. The agreement, as proposed by the Sunil Mehta Committee, aligned its procedures with all the immediate laws, rules and regulations of the country and the RBI. To ensure a rapid resolution of troubled assets, some 22 public sector banks (including India Post Payments Bank), 19 private lenders and 32 foreign banks signed the Inter-Creditor Agreement (ICA) on Monday to quickly monitor the resolution of stressed assets. Finance Minister Piyush Goyal called the move a “big step forward” in the fight against non-performing loans from the banking sector. The agreement was also signed by 12 major financial institutions such as LIC, HUDCO, among others.
A senior debt credit agreement consists of sensitive issues, such as interest charges, costs and allowances, which favour the priority lender over junior lenders. It is also common for a primary lender to be able to modify them without the consent of a junior lender.