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Cosmetic repair: on inter-creditor agreement

It will now be easier for banks to sell stressed assets, but other tricky issues remain

Indian banks trying to sell their troubled(तंग किया/परेशान ) assets(संपत्ति) now have one less hurdle(बाधा/रुकावट) to cross. A group of banks, including(समेत/सहित) public sector, private sector and foreign banks, signed an inter-creditor agreement(समझौता) on Monday to push for the speedy resolution of non-performing loans on their balance sheets. According to the agreement, a majority(बहुमत/अधिकांश) representing(प्रतिनिधित्व करना) two-thirds of the loans within a consortium(संघ/सह-व्यवस्था) of lenders(ऋणदाता/उधारदाताओं) should now be sufficient(पर्याप्त/उचित) to override any objection to the resolution process coming from dissenting(मतभेद करना/असहमति ) lenders. Minority(अल्पसंख्यक ) lenders who suspect(संदिग्ध/संदेहयुक्त)they are being short-changed by other lenders can now either sell their assets at a discount to a willing(इच्छुक/तैयार) buyer or buy out loans from other lenders at a premium. The inter-creditor agreement is aimed at the resolution(समाधान/प्रस्ताव) of loan accounts with a size of ₹50 crore and above that are under the control of a group of lenders. It is part of the “Sashakt” plan approved by the government to address the problem of resolving bad loans. Over the last few years, Indian banks have been forced by the Reserve Bank of India to recognize(मान्यता देना/पहचानना) troubled assets on their books, but their resolution has remained a challenge. According to banker Sunil Mehta, who headed a panel that recommended(की सिफारिश की) the plan, disagreement(बहस/असहमति) between joint lenders is the biggest problem in resolving stressed(प्रभाव डालना/ज़ोर देना) assets. The government hopes that the holdout problem, where the objections of a few lenders prevent(रोकना/प्रतिबंध करना) a settlement between the majority(बहुमत/बहुसंख्य) lenders, will be solved through the inter-creditor agreement.

Such an agreement may persuade(राज़ी करना/समझाना) banks to embark(शुरू करने/लगना) more quickly on a resolution plan for stressed assets. This is an improvement(सुधार की/उन्नति) on the earlier model, which relied solely on the joint lenders’ forum to arrive at a consensus(आम सहमति/मेल) among creditors. It is, in fact, logical for joint lenders who want to avoid a deadlock(स्र्कावट/संकट) to agree on the ground rules of debt resolution prior to lending to any borrower. But the obligation(आभार/कर्तव्य) on the lead lender to come up with a time-bound resolution plan can have unintended(अनायास ही)consequences(परिणाम/महत्त्व). Banks may be compelled to engage(संलग्न/वचनबद्ध करना) in a quick-fire sale of stressed assets due to arbitrary(मनमाना/एकपक्षीय) deadlines on the resolution process. This will work against the interests of lenders looking to get the best price for their stressed assets. Also, it is often in the interest of the majority of creditors to take the time to extract(निकालना/उद्धरण) the most out of their assets. Meanwhile, the biggest obstacle(बाधा/रोड़ा) to bad loan resolution is the absence(अनुपस्थिति/अभाव) of buyers who can purchase stressed assets from banks, and the unwillingness(अनिच्छा/ग़ैर रजामंदी) of banks to sell their loans at a deep discount to their face value. Unless the government can solve this problem, the bad loan problem is likely to remain unresolved for some time to come.


Important Vocabulary


1.Troubled(तंग किया/परेशान )
Synonyms: agitated, anxious, bothered, concerned, confused
Antonyms: calm, certain, comforted, content, happy

Synonyms: complication, difficulty, handicap, hindrance, impediment
Antonyms: advantage, aid, assistance, ease, help

3.Dissenting(मतभेद करना/असहमति )
Synonyms: balk, contradict, demur, differ, argue
Antonyms: accept, agree, consent, approve, join

Synonyms: decision, settlement, verdict, aim, boldness
Antonyms: indecision, apathy, cowardice, fear, flexibility

5.prevent(रोकना/प्रतिबंध करना)
Synonyms: avert, avoid, bar, block, counter
Antonyms: advance, aid, allow, approve, assist

6.Recognize(मान्यता देना/पहचानना)
Synonyms: admit, know, make, note, notice
Antonyms: deny, forget, ignore, misinterpret, miss

7.Persuade(राज़ी करना/समझाना)
Synonyms: advise, assure, cajole, coax, enlist
Antonyms: discourage, dissuade, fail, halt, prevent

8.Consensus(आम सहमति/मेल)
Synonyms: accord, consent, harmony, unanimity, unity
Antonyms: denial, disagreement, dissension, opposition, refusal

Synonyms: accountability, agreement, bond, burden, commitment
Antonyms: asset, disagreement, disbelief, irresponsibility, misunderstanding

10.Engage(संलग्न/वचनबद्ध करना)
Synonyms: employ, enlist, appoint, bespeak, book
Antonyms: shun, cancel, dismiss, fire, free

Synonyms: capricious, discretionary, erratic, frivolous, inconsistent
Antonyms: consistent, definite, dependable, logical, reasonable



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