Loan And Security Agreement for India

Loan And Security Agreement Template for India

A comprehensive legal document governed by Indian law that establishes the terms and conditions of a loan facility while simultaneously creating security interests over specified assets in favor of the lender. The agreement details the loan amount, interest rates, repayment terms, security creation, representations and warranties, covenants, and enforcement mechanisms. It ensures compliance with Indian banking regulations, security laws, and registration requirements while providing adequate protection to the lender's interests and clear obligations for the borrower.

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What is a Loan And Security Agreement?

The Loan and Security Agreement is a fundamental document in secured lending transactions under Indian law, combining both the lending terms and security arrangements in a single instrument. It is typically used when a lender provides financing against specific collateral, requiring comprehensive documentation of both the loan facility and the security package. The agreement must comply with various Indian regulations including the Indian Contract Act, SARFAESI Act, and Registration Act, among others. It serves multiple purposes: documenting the loan terms, creating security interests, establishing covenants and conditions, and providing enforcement mechanisms. This type of agreement is particularly important in corporate financing, project financing, and asset-based lending scenarios where the lender requires robust security protection.

What sections should be included in a Loan And Security Agreement?

1. Parties: Identification of the lender and borrower with complete details

2. Background: Context of the loan, purpose, and brief description of the security being offered

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

4. Loan Amount and Purpose: Details of the loan facility, amount, and permitted use of funds

5. Interest and Fees: Interest rate, calculation method, payment periods, and applicable fees

6. Repayment Terms: Repayment schedule, prepayment provisions, and payment mechanics

7. Security Creation: Creation and perfection of security interests over the secured assets

8. Representations and Warranties: Statements of fact by the borrower regarding their legal status, authority, and secured assets

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

10. Events of Default: Circumstances constituting default and consequences thereof

11. Enforcement Rights: Lender's rights and remedies upon default

12. Expenses and Indemnification: allocation of costs and indemnity obligations

13. Notices: Communication methods and contact details for formal notices

14. Governing Law and Jurisdiction: Choice of law and jurisdiction for dispute resolution

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

What sections are optional to include in a Loan And Security Agreement?

1. Guarantee: Include when there are third-party guarantors for the loan

2. Insurance: Detailed insurance requirements when secured assets require specific insurance coverage

3. Additional Security: For multiple types of security or subsequent security creation

4. Inter-creditor Provisions: Required when there are multiple lenders or ranking of security

5. Tax Provisions: Detailed tax clauses when transaction has significant tax implications

6. Security Trustee: When a security trustee is appointed to hold security for multiple lenders

7. Currency Provisions: For cross-border loans involving multiple currencies

8. Step-in Rights: When lender may need to take control of borrower's projects or contracts

What schedules should be included in a Loan And Security Agreement?

1. Loan Details: Detailed breakdown of loan amount, interest calculations, and repayment schedule

2. Security Assets: Comprehensive list and description of all assets provided as security

3. Conditions Precedent: List of documents and conditions required before loan disbursement

4. Form of Notices: Standard forms for drawdown, prepayment, and other notices

5. Perfection Requirements: List of security perfection and registration requirements

6. Existing Encumbrances: Details of any existing charges or encumbrances on security assets

7. Insurance Requirements: Specific insurance types and coverage required for secured assets

8. Financial Covenants: Detailed financial ratios and calculations for financial covenants

9. Security Documents: Forms of additional security documents to be executed

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

Real Estate

Manufacturing

Infrastructure

Technology

Healthcare

Retail

Agriculture

Energy

Transportation

Construction

Telecommunications

Education

Hospitality

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Corporate Secretarial

Banking Operations

Security Administration

Documentation

Corporate Finance

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Risk Manager

Credit Manager

Loan Officer

Security Trustee

Compliance Officer

Company Secretary

Banking Manager

Treasury Manager

Financial Controller

Credit Analyst

Legal Manager

Transaction Manager

Industries
Indian Contract Act, 1872: Fundamental law governing contract formation, validity, and enforcement in India. Essential for the basic structure and enforceability of the loan agreement.
Transfer of Property Act, 1882: Governs the creation and enforcement of security interests in immovable property, mortgage provisions, and charges on property.
Registration Act, 1908: Mandates registration requirements for certain types of security interests and charges, particularly those involving immovable property.
Companies Act, 2013: Regulates creation and registration of charges by companies, including requirements for filing with the Registrar of Companies.
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act): Provides framework for enforcement of security interests by banks and financial institutions without court intervention.
Recovery of Debts Due to Banks and Financial Institutions Act, 1993: Establishes special tribunals for expeditious adjudication of matters relating to recovery of debts due to banks and financial institutions.
Reserve Bank of India Act, 1934: Contains provisions regarding interest rates, banking regulations, and general lending guidelines that may affect loan terms.
Indian Stamp Act, 1899: Governs stamp duty requirements for loan agreements and security documents.
Limitation Act, 1963: Specifies time limits for filing suits for recovery of loans and enforcement of security interests.
Information Technology Act, 2000: Relevant for electronic execution of documents and digital signatures if the agreement is being executed electronically.
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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