Project Financing Agreement for India

Project Financing Agreement Template for India

A comprehensive financing agreement governed by Indian law that establishes the terms and conditions for providing project finance facilities to fund large-scale infrastructure or development projects. The document details the loan facility, security structure, conditions precedent, representations and warranties, covenants, and project undertakings, all within the framework of Indian banking and financial services regulations. It incorporates specific requirements under Indian contract law, financial regulations, and sector-specific legislation, while also addressing environmental compliance and land acquisition aspects where applicable.

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What is a Project Financing Agreement?

The Project Financing Agreement is a crucial document used in India for structuring and documenting large-scale project finance transactions. It is particularly relevant for infrastructure development, industrial projects, and other capital-intensive ventures where financing is provided primarily based on project cash flows. The agreement operates within India's legal framework, incorporating requirements from various legislation including the Indian Contract Act, Banking Regulation Act, and sector-specific regulations. This document is essential when project sponsors seek to raise substantial debt financing for projects while maintaining limited recourse to sponsor assets. The agreement typically includes detailed provisions for security creation, project monitoring, drawdown mechanics, and risk allocation among parties, tailored to comply with Reserve Bank of India guidelines and other applicable Indian regulatory requirements.

What sections should be included in a Project Financing Agreement?

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

2. Background: Sets out the context of the project and financing arrangement

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

4. Facility: Details of the loan facility including amount, purpose, and tranches

5. Conditions Precedent: Conditions that must be satisfied before drawdown

6. Drawdown and Disbursement: Procedures and requirements for drawing down the facility

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

8. Repayment and Prepayment: Repayment schedule, prepayment terms, and mandatory prepayment events

9. Security: Details of all security arrangements and guarantees

10. Representations and Warranties: Standard and project-specific representations and warranties

11. Covenants: Positive, negative, and financial covenants

12. Events of Default: Circumstances constituting default and consequences

13. Project Undertakings: Specific undertakings related to project completion and operation

14. Account Structure: Project account mechanics and cashflow waterfall

15. Rights and Obligations of Parties: Specific rights and obligations of each party

16. Governing Law and Jurisdiction: Choice of law and dispute resolution mechanisms

What sections are optional to include in a Project Financing Agreement?

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

2. Currency Provisions: Needed for international financing or multiple currency facilities

3. Political Risk Insurance: Included when political risk coverage is part of the financing structure

4. Step-in Rights: Required when lenders need direct project control rights

5. Export Credit Agency Provisions: Included when ECA financing is involved

6. Environmental and Social Requirements: Detailed provisions when project has significant environmental impact or international lenders are involved

7. Islamic Finance Provisions: Required when Islamic financing components are included

8. Tax Provisions: Detailed tax clauses when complex tax structures or international elements are involved

What schedules should be included in a Project Financing Agreement?

1. Project Description: Detailed description of the project and technical specifications

2. Conditions Precedent Documents: List of all required CP documents and their formats

3. Form of Drawdown Request: Standard format for drawdown requests

4. Repayment Schedule: Detailed amortization schedule

5. Security Documents: Forms of all security documents and perfection requirements

6. Financial Covenants and Calculations: Detailed financial ratios and calculation methodologies

7. Project Documents: List and copies of all material project documents

8. Insurance Requirements: Detailed insurance requirements and minimum coverage

9. Form of Reports: Templates for various required reports including construction and operating reports

10. Account Structure and Cashflow Waterfall: Detailed mechanics of project accounts and payment priorities

11. Financial Model: Agreed base case financial model

12. Construction Schedule: Detailed construction milestones and timeline

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

Project Agreement

Cost

Free to use
Clauses
Relevant Industries

Infrastructure

Energy and Power

Transportation

Real Estate

Healthcare

Mining

Telecommunications

Manufacturing

Renewable Energy

Oil and Gas

Water and Sanitation

Industrial Development

Agricultural Processing

Urban Development

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Project Management

Credit

Corporate Banking

Investment Banking

Business Development

Operations

Technical Advisory

Environmental and Social

Strategy

Relevant Roles

Chief Financial Officer

Project Finance Manager

Legal Counsel

Finance Director

Project Manager

Risk Manager

Investment Banker

Corporate Lawyer

Financial Analyst

Treasury Manager

Compliance Officer

Business Development Manager

Infrastructure Development Manager

Senior Banker

Credit Risk Officer

Industries
Indian Contract Act, 1872: Fundamental law governing contract formation, validity, and enforcement in India, essential for the basic structure and enforceability of the financing agreement
Registration Act, 1908: Governs the registration of documents, particularly important for security creation and perfection in project financing
Companies Act, 2013: Regulates corporate borrowing, creation of charges, and corporate governance aspects relevant to project financing
Foreign Exchange Management Act (FEMA), 1999: Regulates foreign investment and external commercial borrowings if international financing is involved
Recovery of Debts Due to Banks and Financial Institutions Act, 1993: Provides mechanism for recovery of debts due to banks and financial institutions
Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI): Governs enforcement of security interests and provides mechanisms for recovery of secured debts
Reserve Bank of India Act, 1934: Contains regulations regarding lending, interest rates, and general banking operations
Environmental Protection Act, 1986: Crucial for projects requiring environmental clearances and compliance
The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013: Important for projects involving land acquisition and rehabilitation aspects
Insolvency and Bankruptcy Code, 2016: Governs insolvency resolution process and provides mechanisms for dealing with default scenarios
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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