Many Indian banks will sign a contract called Inter-Credit Agreement (ICA) on Monday to deal with stressed assets, top banking sources told CNBC-TV18.
The ICA replaces the Joint Lenders' Forum, which was done away by the Reserve Bank of India earlier this year.
The ICA aims to bind minority lenders in implementing a loan restructuring proposal if 66 percent lenders agree to it, the sources said.
Under the ICA, dissenting banks could sell their loan to a lead bank at a discount of 15 percent or buy the entire loan at 125 percent premium.
The banks can also sell their loans to other lenders and non-banking financial corporations (NBFCs), but not to the asset reconstruction companies, as per sources.