Project Finance Loan Agreement for India

Project Finance Loan Agreement Template for India

A comprehensive financing agreement governed by Indian law that establishes the terms and conditions for providing project-specific financing. This document details the lending arrangement where the loan is primarily secured by the project assets and cash flows, with limited or no recourse to the project sponsors. It incorporates provisions specific to Indian banking regulations, security creation requirements, and enforcement mechanisms under Indian law, while addressing project-specific risks, monitoring requirements, and compliance with local regulatory frameworks.

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What is a Project Finance Loan Agreement?

The Project Finance Loan Agreement is a sophisticated financing document used when implementing large-scale projects in India where the financing is primarily secured by the project's assets and cash flows. This document is essential when establishing a limited or non-recourse financing structure, typically used for infrastructure, energy, or industrial projects. It comprehensively addresses various aspects including loan disbursement conditions, security creation, project monitoring, and compliance requirements under Indian law. The agreement needs to comply with Reserve Bank of India guidelines, Indian banking regulations, and sector-specific requirements while incorporating international best practices in project finance. It is particularly crucial in establishing the rights and obligations of all parties involved in the project financing structure while ensuring bankability and enforceability under Indian jurisdiction.

What sections should be included in a Project Finance Loan Agreement?

1. Parties: Identification of the lender(s), borrower, and any guarantors or security providers

2. Background: Description of the project, purpose of the facility, and context of the financing

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

4. The Facility: Details of the loan amount, purpose, and availability period

5. Conditions Precedent: Documents and conditions required before drawdown of the facility

6. Drawdown: Procedures and requirements for drawdown requests and disbursement

7. Interest: Interest rate, calculation methods, payment dates, and default interest provisions

8. Repayment: Repayment schedule, prepayment provisions, and mandatory prepayment events

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

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

11. Information Undertakings: Requirements for financial and project-related reporting

12. General Undertakings: Positive and negative covenants regarding project operation and borrower conduct

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

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

15. Changes to Parties: Provisions regarding assignments and transfers

16. Administration: Payment mechanics, calculations, and notices

17. Governing Law and Jurisdiction: Choice of law and dispute resolution provisions

What sections are optional to include in a Project Finance Loan Agreement?

1. Intercreditor Provisions: Required when multiple lenders or classes of debt are involved, establishing priority and voting rights

2. Account Bank Arrangements: Needed when specific project accounts and cash flow waterfall mechanisms are required

3. Step-in Rights: Included when lenders require rights to take control of the project in certain circumstances

4. Insurance: Detailed section required for projects with significant insurance requirements

5. Environmental and Social Requirements: Required for projects with significant environmental or social impact

6. Technical Requirements: Needed for projects with specific technical performance criteria

7. Hedging Obligations: Required when interest rate or currency hedging is mandatory

8. Political Risk Protection: Included for projects in politically sensitive areas or sectors

What schedules should be included in a Project Finance Loan Agreement?

1. Schedule 1 - Conditions Precedent: Detailed list of all required conditions precedent documents

2. Schedule 2 - Form of Drawdown Request: Template for borrower's drawdown requests

3. Schedule 3 - Repayment Schedule: Detailed amortization schedule

4. Schedule 4 - Project Documents: List and copies of all material project documents

5. Schedule 5 - Security Documents: List and copies of all security documents

6. Schedule 6 - Financial Covenants: Detailed financial ratios and calculations

7. Schedule 7 - Form of Compliance Certificate: Template for periodic compliance reporting

8. Schedule 8 - Project Budget: Detailed project cost breakdown and funding plan

9. Schedule 9 - Project Timeline: Construction and implementation schedule

10. Schedule 10 - Technical Specifications: Detailed technical requirements and performance criteria

11. Schedule 11 - Insurance Requirements: Detailed insurance coverage requirements

12. Schedule 12 - Forms of Reports: Templates for various required periodic reports

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

Infrastructure

Energy

Renewable Energy

Transportation

Real Estate

Mining

Oil and Gas

Healthcare

Telecommunications

Manufacturing

Utilities

Waste Management

Ports and Airports

Education

Relevant Teams

Legal

Finance

Treasury

Risk Management

Project Management

Compliance

Corporate Development

Credit

Commercial

Operations

Technical

Business Development

Relevant Roles

Chief Financial Officer

Finance Director

Project Finance Manager

Legal Counsel

Project Director

Risk Manager

Commercial Director

Treasury Manager

Contract Manager

Compliance Officer

Investment Manager

Project Development Manager

Credit Risk Officer

Business Development Director

Corporate Finance 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.
Banking Regulation Act, 1949: Regulates banking operations in India, including lending activities and security creation by banks.
Registration Act, 1908: Governs the registration of documents, including security documents that may be part of the project finance package.
Companies Act, 2013: Relevant for corporate borrowing, creation of charges, and corporate authorizations required for the loan agreement.
Foreign Exchange Management Act (FEMA), 1999: Regulates foreign investment and external commercial borrowings if the project involves foreign currency financing.
Recovery of Debts Due to Banks and Financial Institutions Act, 1993: Provides mechanisms for recovery of debts by banks and financial institutions.
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI): Governs the enforcement of security interests created in favor of banks and financial institutions.
Reserve Bank of India Act, 1934: Contains provisions regarding interest rates, priority sector lending, and general banking regulations.
Indian Stamp Act, 1899: Governs the stamp duty payable on loan agreements and security documents.
Environmental Protection Act, 1986: Relevant for projects that may have environmental implications, ensuring compliance with environmental regulations.
Teams

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