Project Finance Contract for India

Project Finance Contract Template for India

A comprehensive legal agreement governed by Indian law that structures the financing arrangement for large-scale infrastructure and development projects. The document establishes the terms and conditions for project financing, including loan facilities, security arrangements, conditions precedent, covenants, and monitoring requirements. It incorporates specific provisions compliant with Indian banking regulations, corporate law, and sector-specific legislation while addressing the complex relationships between multiple stakeholders including lenders, project sponsors, contractors, and government authorities. The agreement typically follows international project finance principles while adapting to Indian legal and regulatory requirements.

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What is a Project Finance Contract?

The Project Finance Contract serves as the primary financing document for large-scale infrastructure and development projects in India, establishing the legal and financial framework for project implementation. This document is essential when implementing projects through limited-recourse or non-recourse financing structures, where the project's assets and cash flows serve as the primary security. The agreement must comply with Indian legal requirements including the Indian Contract Act, Banking Regulation Act, and sector-specific regulations while incorporating international best practices in project finance. It typically includes detailed provisions for loan facilities, security arrangements, project accounts, construction and operation requirements, and risk allocation mechanisms. The document is particularly crucial for projects requiring substantial capital investment and involving multiple stakeholders, where careful structuring of financial and contractual arrangements is necessary for project success.

What sections should be included in a Project Finance Contract?

1. Parties: Identification of all parties to the agreement including lenders, borrowers, sponsors, and security providers

2. Background: Context of the project, purpose of financing, and basic structure of the transaction

3. Definitions and Interpretation: Comprehensive definitions of terms used throughout the agreement and rules of interpretation

4. Facility and Purpose: Details of the credit facility, loan amount, and permitted use of proceeds

5. Conditions Precedent: Prerequisites to be satisfied before loan disbursement

6. Disbursement Procedures: Process and requirements for drawing down the loan

7. Repayment and Prepayment: Terms of loan repayment, prepayment options, and consequences

8. Interest and Fees: Interest calculation, payment periods, default interest, and applicable fees

9. Security Structure: Overview of security package and ranking of security interests

10. Representations and Warranties: Statements of fact and assurances given by the borrower/sponsor

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

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

13. Project Undertakings: Specific obligations related to project construction, operation, and maintenance

14. Accounts and Cash Flow Waterfall: Project account structure and priority of payments

15. Monitoring and Reporting Requirements: Obligations to provide financial and project-related information

16. Governing Law and Jurisdiction: Applicable law and dispute resolution mechanisms

What sections are optional to include in a Project Finance Contract?

1. Insurance: Detailed insurance requirements - included when not covered in separate agreement

2. Direct Agreements: Terms of direct agreements with project contractors - needed when step-in rights are required

3. Intercreditor Provisions: Required when multiple lenders or classes of debt are involved

4. Political Risk Protection: Included for projects with significant political risk exposure

5. Environmental and Social Requirements: Detailed when project has significant environmental/social impact

6. Sponsor Support: Additional sponsor obligations - included when project requires sponsor backup

7. Currency and Hedging Requirements: Required for projects with significant foreign exchange exposure

8. Refinancing Provisions: Included when refinancing is contemplated as part of the structure

What schedules should be included in a Project Finance Contract?

1. Project Description: Detailed technical description of the project

2. Construction Schedule: Timeline and milestones for project construction

3. Financial Model: Base case financial projections and assumptions

4. Form of Drawdown Request: Standard format for loan disbursement requests

5. Security Documents: Forms of various security documents

6. Insurance Requirements: Detailed list of required insurance coverage

7. Project Contracts: Key terms or copies of material project contracts

8. Technical Specifications: Detailed technical requirements for the project

9. Environmental and Social Action Plan: Required environmental and social compliance measures

10. Form of Reports: Templates for various required project reports

11. Financial Ratios and Calculations: Detailed methodology for financial covenant calculations

12. Account Structure: Detailed structure and operation of project accounts

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

Finance Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Infrastructure

Power and Energy

Transportation

Real Estate

Mining

Oil and Gas

Telecommunications

Water and Sanitation

Healthcare

Education

Industrial Development

Renewable Energy

Urban Development

Agriculture and Irrigation

Ports and Airports

Relevant Teams

Legal

Finance

Project Management

Risk Management

Treasury

Corporate Finance

Compliance

Business Development

Credit

Investment Banking

Infrastructure Development

Operations

Strategy

Corporate Planning

Relevant Roles

Chief Financial Officer

Finance Director

Project Finance Manager

Legal Counsel

Project Director

Investment Manager

Risk Manager

Treasury Manager

Corporate Finance Manager

Compliance Officer

Business Development Director

Infrastructure Development Manager

Senior Banker

Project Finance Analyst

General Counsel

Transaction Lawyer

Financial Controller

Credit Risk Manager

Industries
Indian Contract Act, 1872: Fundamental law governing contract formation, validity, and enforcement in India. Essential for structuring the basic contractual framework of the project finance agreement.
Registration Act, 1908: Governs the registration of documents, particularly important for security creation and property-related agreements in project finance.
Companies Act, 2013: Regulates corporate entities' operations, including creation of charges, corporate governance, and financial arrangements.
Foreign Exchange Management Act (FEMA), 1999: Regulates foreign investment and cross-border financial transactions if the project involves foreign funding.
Banking Regulation Act, 1949: Governs banking operations and lending activities, crucial for project financing through Indian banks.
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI): Provides framework for security enforcement and asset reconstruction in case of default.
Environmental Protection Act, 1986: Mandates environmental compliance requirements for infrastructure projects.
Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: Governs land acquisition processes for infrastructure projects.
Goods and Services Tax (GST) Laws: Regulates taxation aspects of project transactions and services.
Specific Sector Laws: Depending on the project sector (e.g., Electricity Act for power projects, Mining Acts for mining projects), sector-specific regulations must be considered.
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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