The Forbearance Agreement Loan is utilized when a borrower faces financial hardship that impacts their ability to meet original loan obligations, but where the lender believes the difficulties are temporary and can be resolved through structured relief. This document type is particularly relevant in the Indian financial market, where it must align with RBI guidelines on loan restructuring and modification. The agreement typically includes detailed terms of forbearance, modified payment schedules, conditions precedent, ongoing obligations, and specific triggers for termination. It serves as a critical tool for both lenders and borrowers to avoid default while maintaining the underlying loan relationship, especially important in challenging economic conditions or sector-specific downturns. The document must carefully balance the interests of all parties while ensuring compliance with Indian banking regulations and contract law.

1. Parties: Identification of the lender(s) and borrower(s), including their legal details and addresses

2. Background: Recitals detailing the original loan agreement, current default status, and the basis for the forbearance arrangement

3. Definitions: Definitions of key terms used throughout the agreement, including references to the original loan agreement

4. Acknowledgment of Debt: Borrower's acknowledgment of the outstanding debt amount and default status

5. Forbearance Terms: Specific terms of the forbearance, including duration and conditions under which the lender agrees not to exercise remedies

6. Modified Payment Terms: Details of revised payment schedule, amounts, and any temporary payment reductions

7. Conditions Precedent: Conditions that must be satisfied before the forbearance becomes effective

8. Borrower's Covenants: Ongoing obligations of the borrower during the forbearance period

9. Representations and Warranties: Updated representations and warranties from the borrower

10. Events of Default: Circumstances that would terminate the forbearance and trigger enforcement rights

11. Termination: Conditions under which the forbearance agreement may be terminated

12. Effect on Original Loan Agreement: Clarification that original loan terms remain in effect except as modified by this agreement

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

14. Notices: Process and addresses for formal communications between parties

15. Counterparts: Provision for execution in multiple counterparts