Debt Purchase Agreement for India

Debt Purchase Agreement Template for India

A comprehensive legal agreement governed by Indian law that facilitates the transfer of debt from one party (seller) to another (purchaser). The document outlines the terms and conditions of the debt purchase, including the purchase price, payment mechanisms, representations and warranties, and completion requirements. It ensures compliance with Indian regulations including the Transfer of Property Act, SARFAESI Act, and relevant RBI guidelines. The agreement includes provisions for due diligence, transfer of security interests, and ongoing obligations of both parties, while addressing specific requirements for debt assignment under Indian jurisdiction.

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What is a Debt Purchase Agreement?

The Debt Purchase Agreement serves as a crucial instrument in India's financial markets for transferring debt obligations from one entity to another. It is commonly used when financial institutions want to sell non-performing assets, when companies seek to restructure their debt portfolios, or when specialized debt acquisition firms purchase debt portfolios. The document must comply with Indian regulatory requirements, including RBI guidelines, the Transfer of Property Act, and the SARFAESI Act. It typically includes detailed provisions about the debt being transferred, purchase price calculations, representations and warranties, and completion mechanics. This agreement is particularly important in the context of India's evolving debt market and the government's focus on resolving non-performing assets in the banking sector.

What sections should be included in a Debt Purchase Agreement?

1. Parties: Identification of the Seller (current debt holder) and Purchaser, including full legal names, registration numbers, and registered addresses

2. Background: Context of the debt sale, including origin of the debt and current status

3. Definitions and Interpretation: Definitions of key terms used in the agreement and rules of interpretation

4. Sale and Purchase: Core terms of the debt purchase, including what is being sold and confirmation of transfer

5. Purchase Price and Payment: Amount to be paid for the debt and payment terms, including any adjustments or deductions

6. Completion: Details of the completion process, timing, and deliverables

7. Seller's Representations and Warranties: Warranties regarding the debt, seller's authority, and capacity to sell

8. Purchaser's Representations and Warranties: Warranties regarding purchaser's authority and capacity to purchase

9. Transfer and Assignment: Legal mechanics of the transfer and any requirements under Indian law

10. Further Assurance: Obligations to execute further documents and take additional steps if needed

11. Confidentiality: Provisions regarding confidential information and its treatment

12. Notices: Process for giving formal notices under the agreement

13. Governing Law and Jurisdiction: Confirmation of Indian law as governing law and jurisdiction for disputes

14. General Provisions: Standard boilerplate clauses including severability, entire agreement, and amendments

What sections are optional to include in a Debt Purchase Agreement?

1. Security Assignment: Required when the debt is secured and security interests need to be transferred

2. Regulatory Compliance: Needed when either party is regulated by RBI or other regulatory bodies

3. Data Protection: Required when personal data is involved in the debt transfer

4. True Sale Provisions: Important when the transaction needs to be structured as a true sale rather than a security arrangement

5. Interim Period Provisions: Used when there's a gap between signing and completion

6. Post-Completion Obligations: Required when ongoing obligations exist after completion

7. Buy-Back Provisions: Optional clause allowing seller to repurchase the debt under specific circumstances

8. Collection Agency Arrangements: Needed when third-party collection agencies are involved

What schedules should be included in a Debt Purchase Agreement?

1. Schedule 1 - Debt Details: Detailed description of the debt being purchased, including principal amount, interest, and any charges

2. Schedule 2 - Completion Requirements: List of documents and actions required for completion

3. Schedule 3 - Form of Transfer Notice: Template for the notice of transfer to be sent to the debtor

4. Schedule 4 - Seller's Power of Attorney: Form of power of attorney authorizing purchaser to act in seller's name

5. Schedule 5 - Security Details: Details of any security interests being transferred

6. Schedule 6 - Related Documents: List and copies of relevant documents relating to the debt

7. Appendix A - Calculation of Purchase Price: Detailed breakdown of how the purchase price was calculated

8. Appendix B - Due Diligence Results: Summary of due diligence findings and any identified issues

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
Clauses
Relevant Industries

Banking

Financial Services

Asset Management

Debt Recovery

Asset Reconstruction

Investment Banking

Private Equity

Corporate Finance

Non-Banking Financial Companies (NBFCs)

Insurance

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Portfolio Management

Corporate Finance

Due Diligence

Asset Recovery

Investment

Operations

Debt Recovery

Document Management

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Compliance Officer

Risk Manager

Portfolio Manager

Debt Recovery Officer

Investment Manager

Treasury Manager

Credit Manager

Corporate Finance Manager

Due Diligence Officer

Asset Recovery Specialist

Financial Controller

Legal Director

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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