What was the purpose of Inter-Creditor Agreement signed by Indian banks and financial institutions recently?

(a) To lessen the Government of India's perennial burden of fiscal deficit and current account deficit
(b) To support the infrastructure projects of Central and State Governments
(c) To act as independent regulator in case of applications for loans of ₹ 50 crore or more
(d) To aim at faster resolution of stressed assets of ₹ 50 crore or more which are under consortium lending ✓ UPSC's answer

Why the answer is (d)

• The Inter-Creditor Agreement (July 2018), framed under the Sunil Mehta committee's 'Project Sashakt', binds lenders in a consortium to a common resolution plan for stressed accounts of ₹50 crore and above: a plan approved by 66% of lenders by value binds the rest — option (d).

• It was meant to end delays caused by dissenting banks and to resolve NPAs faster outside the IBC.

• It has nothing to do with fiscal deficits (a), infrastructure funding (b) or regulating loan applications (c).

• Hence option (d).

Why the other options are wrong

(a) To lessen the Government of India's perennial burden of fiscal deficit and current…: The ICA is unrelated to fiscal or current account deficits.
(b) To support the infrastructure projects of Central and State Governments: It is not an infrastructure-funding arrangement.
(c) To act as independent regulator in case of applications for loans of ₹ 50 crore or more: It is not a regulator; it is an agreement among lenders.

Asked in the GS Paper I of the UPSC Civil Services Preliminary Examination 2019, held on 2 June 2019. Question and answer key: Union Public Service Commission. Explanation: UPSC Answer Check.