The Interest Only Promissory Note is a specialized financial instrument commonly used in Indian lending transactions where the borrower needs to manage cash flow by making only interest payments during the loan term. This document type is particularly useful in situations where the borrower expects a large future payment or requires temporary financial flexibility. The document must comply with the Negotiable Instruments Act, 1881, and other relevant Indian legislation, including proper stamping under the Indian Stamp Act. It typically includes details of the principal amount, interest rate, payment schedule, default provisions, and any security arrangements. This type of promissory note is particularly common in business financing, real estate transactions, and bridge financing arrangements where the borrower requires temporary financing with minimal initial payment obligations.
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1. Date and Place of Execution: Specifies when and where the promissory note is executed, crucial for enforcement and limitation periods
2. Parties: Identifies the maker (promisor) and the payee (promisee) with full legal names and addresses
3. Promise to Pay: Clear, unconditional promise to pay a specific sum with interest only payments
4. Principal Amount: States the principal amount in both figures and words to avoid ambiguity
5. Interest Rate and Calculation: Specifies the interest rate, calculation method, and payment frequency
6. Payment Terms: Details of interest payment schedule and principal repayment at maturity
7. Default and Consequences: Specifies what constitutes default and the consequences thereof
8. Signature and Stamp: Space for maker's signature and required stamp duty
1. Security Details: Include when the note is secured by any collateral or assets
2. Guarantor Details: Required when a third party is guaranteeing the payment
3. Prepayment Terms: Include if early repayment of principal is allowed and under what conditions
4. Notice Requirements: Include if specific notice procedures are required for any actions
5. Electronic Payment Instructions: Include when electronic payments are the preferred method
6. Jurisdiction Clause: Include when parties want to specify a particular court's jurisdiction
7. Force Majeure: Include when parties want to address unforeseen circumstances affecting payments
1. Payment Schedule: Detailed schedule of interest payment dates and amounts
2. Security Details Schedule: If applicable, detailed description of security/collateral provided
3. Bank Account Details: Specified bank account information for making payments
4. KYC Documents: Copies of required Know Your Customer documents as per RBI guidelines
Relevant legal definitions
Business Day
Default Interest Rate
Due Date
Event of Default
Interest Payment Date
Interest Period
Interest Rate
Maturity Date
Note Amount
Payment Account
Place of Payment
Principal
Security
Stamp Duty
Working Day
Applicable Law
Base Rate
Promissory Note
Outstanding Amount
Default Notice
Guarantor
Interest Only Period
Prepayment
Bank Holiday
Force Majeure Event
Default Interest Rate
Due Date
Event of Default
Interest Payment Date
Interest Period
Interest Rate
Maturity Date
Note Amount
Payment Account
Place of Payment
Principal
Security
Stamp Duty
Working Day
Applicable Law
Base Rate
Promissory Note
Outstanding Amount
Default Notice
Guarantor
Interest Only Period
Prepayment
Bank Holiday
Force Majeure Event
Clauses
Promise to Pay
Interest Payment
Principal Repayment
Default
Acceleration
Security
Representations and Warranties
Notice
Assignment
Amendment
Governing Law
Jurisdiction
Force Majeure
Stamp Duty
Execution
Prepayment
Electronic Payment
Set-Off
Guarantees
Severability
Indemnification
Costs and Expenses
Registration
Waiver
Entire Agreement
Interest Payment
Principal Repayment
Default
Acceleration
Security
Representations and Warranties
Notice
Assignment
Amendment
Governing Law
Jurisdiction
Force Majeure
Stamp Duty
Execution
Prepayment
Electronic Payment
Set-Off
Guarantees
Severability
Indemnification
Costs and Expenses
Registration
Waiver
Entire Agreement
Relevant Industries
Banking & Financial Services
Real Estate
Manufacturing
Trading & Commerce
Agriculture
Small & Medium Enterprises
Professional Services
Education
Healthcare
Infrastructure
Technology
Relevant Teams
Legal
Finance
Treasury
Credit
Risk Management
Compliance
Corporate Secretarial
Banking Operations
Loan Administration
Business Development
Relevant Roles
Chief Financial Officer
Finance Manager
Legal Counsel
Corporate Lawyer
Banking Officer
Credit Manager
Risk Officer
Treasury Manager
Accounts Manager
Compliance Officer
Company Secretary
Financial Controller
Loan Officer
Business Development Manager
Investment Manager
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