Commercial Loan Agreement for India

Commercial Loan Agreement Template for India

A Commercial Loan Agreement under Indian law is a comprehensive legal document that establishes the terms and conditions for a lending arrangement between a financial institution and a corporate borrower. The agreement details the loan amount, interest rates, repayment terms, security arrangements, and various covenants that govern the borrower's obligations. It incorporates provisions compliant with Indian banking regulations, including RBI guidelines, and includes enforcement mechanisms under Indian law. The document addresses security creation, default scenarios, and remedies available to the lender, while ensuring compliance with Indian stamp duty and registration requirements.

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What is a Commercial Loan Agreement?

The Commercial Loan Agreement is essential for corporate financing transactions in India, used when a financial institution provides debt financing to a corporate entity. It serves as the primary document governing the lending relationship, incorporating requirements under Indian banking laws, RBI regulations, and financial sector guidelines. The agreement is crucial for both secured and unsecured lending, typically involving loan amounts above INR 1 crore, and requires careful consideration of security creation, registration requirements, and stamp duty implications. It includes detailed provisions for drawdown conditions, repayment schedules, financial covenants, reporting requirements, and events of default, all structured to ensure enforceability under Indian law and alignment with banking sector practices.

What sections should be included in a Commercial Loan Agreement?

1. Parties: Identification of the lender and borrower with complete legal names, registration details, and addresses

2. Background: Context of the loan agreement, including purpose of the loan and brief background of the parties

3. Definitions: Definitions of key terms used throughout the agreement

4. Loan Amount and Purpose: Specification of the loan amount, currency, and permitted use of funds

5. Interest Rate: Details of interest rate, calculation method, and payment frequency

6. Repayment Terms: Schedule of repayment, including principal and interest payment dates

7. Security: Details of collateral or security provided against the loan

8. Conditions Precedent: Conditions that must be satisfied before loan disbursement

9. Representations and Warranties: Statements of fact and assurances given by the borrower

10. Covenants: Positive and negative obligations of the borrower during the loan term

11. Events of Default: Circumstances that constitute default and consequences thereof

12. Remedies: Rights and remedies available to the lender in case of default

13. Notices: Process and addresses for serving notices between parties

14. Governing Law and Jurisdiction: Applicable law and courts having jurisdiction over disputes

15. Miscellaneous: Standard boilerplate provisions including amendments, assignments, and severability

What sections are optional to include in a Commercial Loan Agreement?

1. Guarantee: Required when there is a third-party guarantor for the loan

2. Syndication: Needed when multiple lenders are involved in the loan arrangement

3. Insurance: Required when specific insurance coverage is mandatory for the security assets

4. Step-in Rights: Included when lender requires right to take control of borrower's business in specific circumstances

5. Intercreditor Provisions: Required when there are multiple creditors and their priorities need to be established

6. Currency Protection: Needed for loans involving foreign currency or cross-border transactions

7. Tax Provisions: Detailed section required when complex tax implications are involved

8. Assignment and Transfer: Detailed provisions needed when loan may be transferred or syndicated

What schedules should be included in a Commercial Loan Agreement?

1. Repayment Schedule: Detailed amortization table showing payment dates, principal and interest breakup

2. Security Details: Comprehensive description of all security assets and their valuations

3. Conditions Precedent Documents: List of all documents required before loan disbursement

4. Form of Drawdown Notice: Template for borrower to request loan disbursement

5. Form of Compliance Certificate: Template for periodic compliance reporting by borrower

6. Existing Encumbrances: List of existing charges or encumbrances on borrower's assets

7. Financial Covenants Calculations: Formulas and methods for calculating financial covenants

8. Required Insurance: Details of mandatory insurance coverage for security assets

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

India

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking & Financial Services

Corporate Lending

Real Estate

Manufacturing

Infrastructure

Technology

Healthcare

Retail

Agriculture

Energy

Transportation

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Corporate Banking

Operations

Company Secretarial

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Banking Lawyer

Finance Manager

Treasury Manager

Risk Manager

Compliance Officer

Credit Officer

Relationship Manager

Corporate Banking Head

Legal Director

Company Secretary

Financial Controller

Industries
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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