Recourse Loan Agreement for India

Recourse Loan Agreement Template for India

A comprehensive lending document governed by Indian law that establishes the terms and conditions of a loan where the lender has recourse against the borrower's other assets or guarantors beyond the primary collateral. The agreement details the loan amount, interest rates, repayment terms, security arrangements, events of default, and remedies available to the lender. It incorporates provisions compliant with Indian banking regulations, the Indian Contract Act, and other relevant legislation, ensuring enforceability and protection of the lender's interests while clearly defining the borrower's obligations and rights.

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What is a Recourse Loan Agreement?

The Recourse Loan Agreement is a critical financial instrument used in Indian lending transactions where the lender seeks comprehensive security and recovery rights. This document is particularly relevant when extending credit facilities where the primary collateral alone may not provide sufficient security for the loan amount. The agreement, governed by Indian law, includes detailed provisions for loan disbursement, repayment mechanisms, security creation, and enforcement rights. It is structured to comply with Indian banking regulations, debt recovery laws (including SARFAESI Act), and contract law principles. The document becomes essential in corporate financing, project financing, and other scenarios where lenders require additional protection through personal guarantees or access to other assets of the borrower beyond the primary security.

What sections should be included in a Recourse Loan Agreement?

1. Parties: Identification of the lender and borrower with complete details including registration numbers and addresses

2. Background: Recitals explaining the context of the loan and the parties' intentions

3. Definitions and Interpretation: Definitions of key terms and rules for interpreting the agreement

4. Loan Amount and Purpose: Specification of the loan amount, purpose, and any tranches if applicable

5. Interest Rate and Computation: Details of interest rate, calculation method, and payment frequency

6. Repayment Terms: Schedule of repayment, including principal and interest payment dates

7. Security: Details of security/collateral provided for the loan

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

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

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

11. Rights and Remedies: Lender's rights upon default, including recourse mechanisms

12. Expenses and Indemnification: Allocation of costs and indemnification obligations

13. Notices: Process and addresses for serving notices

14. Governing Law and Jurisdiction: Specification of Indian law as governing law and jurisdiction details

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

What sections are optional to include in a Recourse Loan Agreement?

1. Guarantor Provisions: Required when there is a guarantor for the loan, detailing guarantor's obligations and rights

2. Insurance: Required when specific insurance coverage is mandatory for the security/collateral

3. Special Conditions Precedent: Used when there are specific conditions to be met before loan disbursement

4. Prepayment Terms: Include when early repayment is allowed, specifying terms and penalties

5. Assignment and Transfer: Required when either party may need to transfer rights or obligations

6. Force Majeure: Include when specific force majeure provisions are needed beyond standard contract frustration

7. Step-In Rights: Required in complex transactions where lender may need to take control of assets/operations

8. Cross-Default: Include when default under other agreements should trigger default under this loan

What schedules should be included in a Recourse Loan Agreement?

1. Schedule 1 - Loan Details: Detailed breakdown of loan amount, interest rates, and payment schedule

2. Schedule 2 - Security Details: Comprehensive description of security/collateral including valuations

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

4. Schedule 4 - Drawdown Request Form: Standard form for requesting loan disbursement

5. Schedule 5 - Repayment Schedule: Detailed amortization schedule with payment dates and amounts

6. Schedule 6 - Financial Covenants: Specific financial ratios and requirements to be maintained

7. Appendix A - Form of Compliance Certificate: Template for periodic compliance certification by borrower

8. Appendix B - Security Creation Documents: Forms and formats for creating security interests

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
Relevant Industries

Banking

Financial Services

Real Estate

Manufacturing

Infrastructure

Energy

Healthcare

Technology

Retail

Agriculture

Transportation

Construction

Education

Hospitality

Relevant Teams

Legal

Finance

Credit

Risk Management

Compliance

Treasury

Corporate Banking

Operations

Company Secretarial

Documentation

Asset Management

Loan Administration

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Credit Manager

Risk Manager

Loan Officer

Relationship Manager

Compliance Officer

Treasury Manager

Financial Controller

Company Secretary

Banking Operations Manager

Credit Analyst

Legal Manager

Transaction Manager

Industries
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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