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An Intercreditor Agreement sets the ground rules between multiple lenders who provide loans to the same borrower. In India, these agreements have become crucial since the RBI's 2019 framework for resolution of stressed assets, helping banks and financial institutions manage their shared lending relationships.

The agreement spells out key priorities: which lender gets paid first, how loan enforcement decisions are made, and what happens during debt restructuring. For example, when a company faces financial trouble, the agreement guides how lenders work together to recover their money, with lead banks typically getting stronger voting rights in key decisions about the borrower's assets and repayment terms.

An Intercreditor Agreement becomes essential when multiple lenders join forces to finance a single borrower in India. Banks typically need this agreement before participating in consortium lending or multiple banking arrangements, especially for large corporate loans exceeding ₹100 crore.

The timing is critical - put this agreement in place before disbursing the loans. It's particularly important when dealing with different types of debt (like working capital and term loans), when lending to high-risk sectors, or when the borrower's credit rating suggests potential stress. RBI guidelines make these agreements mandatory for resolution of stressed assets, so having them ready helps avoid complications during debt restructuring.

• Basic Consortium Agreement: Used when multiple banks jointly lend through a formal consortium, defining the lead bank's role and voting rights
• Multiple Banking Agreement: Governs relationships between separate lenders without formal consortium arrangements
• Secured Creditors Agreement: Specifically addresses priority and rights among lenders holding different security interests
• Subordination Agreement: Details payment hierarchies between senior and junior lenders, common in structured finance deals
• Special Situation Agreement: Tailored for distressed assets, following RBI's stressed asset framework with specific enforcement mechanisms

• Lead Banks: Usually large public sector banks who coordinate the lending syndicate and manage the Intercreditor Agreement's implementation
• Member Banks: Other financial institutions in the lending arrangement who must follow the agreement's terms for loan recovery and restructuring
• Corporate Borrowers: Large companies taking multiple loans, though they're not direct parties to the agreement
• Legal Counsel: Specialized banking lawyers who draft and review these agreements, ensuring RBI compliance
• Resolution Professionals: Insolvency experts who refer to these agreements during corporate debt restructuring

• Loan Details: Collect information about each lender's exposure, loan types, and security interests in the borrower's assets
• Voting Rights: Determine each lender's voting share based on their loan exposure and RBI guidelines
• Security Structure: Map out existing and proposed security arrangements, including charge rankings
• Resolution Framework: Define clear timelines and processes for handling defaults as per RBI's stressed asset rules
• Documentation: Our platform generates customized agreements ensuring all these elements align with current banking regulations and market practice

• Identification Section: Names, roles, and exposures of all participating lenders and the borrower's details
• Voting Mechanism: Clear formula for calculating voting rights and majority thresholds for different decisions
• Security Sharing: Detailed provisions on sharing of security interests and enforcement procedures
• Payment Waterfall: Priority order for distributing recoveries among secured and unsecured creditors
• Default Resolution: Procedures aligned with RBI's stressed asset framework, including standstill periods
• Exit Provisions: Terms for lenders joining or leaving the arrangement, including transfer restrictions

An Intercreditor Agreement differs significantly from an Agency Agreement, though both play crucial roles in lending arrangements. While Intercreditor Agreements manage relationships between multiple lenders, Agency Agreements establish the rights and duties of a single agent bank acting on behalf of a lending syndicate.

• Purpose and Scope: Intercreditor Agreements focus on lender priority and collective decision-making, while Agency Agreements detail how one bank administers the loan on behalf of others
• Party Structure: Intercreditor involves all lenders as direct parties, whereas Agency Agreements primarily bind the agent bank to perform specific duties
• Enforcement Rights: Intercreditor Agreements dictate how recovery actions are coordinated, while Agency Agreements focus on day-to-day loan administration
• Legal Framework: Under RBI guidelines, Intercreditor Agreements are mandatory for stressed asset resolution, but Agency Agreements are optional administrative tools