Revolving Promissory Note for India

Revolving Promissory Note Template for India

A Revolving Promissory Note under Indian law is a negotiable instrument that creates a flexible borrowing arrangement where the borrower can draw down, repay, and redraw funds up to a specified credit limit. The document must comply with the Indian Negotiable Instruments Act, 1881, and includes specific provisions for interest calculations, repayment terms, and draw-down mechanisms. It combines the legal characteristics of a standard promissory note with revolving credit facility features, making it particularly useful for businesses requiring ongoing access to credit while maintaining the simplicity and negotiability of a promissory note.

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What is a Revolving Promissory Note?

The Revolving Promissory Note is commonly used in Indian business transactions where parties require a flexible credit arrangement that allows for multiple draw-downs and repayments over time. This instrument is particularly valuable for businesses with cyclical cash flow needs or ongoing working capital requirements. The document must comply with the Indian Negotiable Instruments Act, 1881, and typically includes detailed provisions for credit limits, interest calculations, draw-down mechanisms, and repayment terms. It offers the advantage of combining the legal certainty of a promissory note with the flexibility of a revolving credit facility, making it an efficient tool for managing recurring credit needs while maintaining the enforceability benefits of a negotiable instrument under Indian law.

What sections should be included in a Revolving Promissory Note?

1. Parties: Identification of the maker (borrower) and the payee (lender) with complete legal names and addresses

2. Background: Context of the revolving credit arrangement and relationship between the parties

3. Definitions: Key terms used in the note including 'Credit Limit', 'Draw Period', 'Interest Rate', 'Payment Date', etc.

4. Promise to Pay: Unconditional promise to pay the principal amount or such lesser amount as may be outstanding, plus interest

5. Credit Facility Terms: Details of the revolving nature, maximum credit limit, and draw-down provisions

6. Interest Rate and Calculations: Specified interest rate, calculation method, and payment frequency

7. Repayment Terms: Payment schedule, minimum payment requirements, and prepayment provisions

8. Draw-Down Mechanism: Process and conditions for requesting and receiving advances under the note

9. Events of Default: Circumstances that constitute default and consequences thereof

10. Representations and Warranties: Standard declarations by the maker regarding their capacity and authority to execute the note

What sections are optional to include in a Revolving Promissory Note?

1. Security Provisions: Include when the note is secured by collateral or guarantees

2. Insurance Requirements: Include when specific insurance coverage is required for the maker or collateral

3. Financial Covenants: Include when the lender requires ongoing financial performance metrics

4. Cross-Default Provisions: Include when the note is part of a larger financing arrangement

5. Assignment and Transfer: Include when transfer rights need to be specified or restricted

6. Governing Law and Jurisdiction: Include when parties are in different jurisdictions or specific court jurisdiction needs to be established

What schedules should be included in a Revolving Promissory Note?

1. Schedule A - Draw-Down and Repayment Schedule: Detailed schedule showing draw-down periods, amounts, and repayment dates

2. Schedule B - Interest Calculation Methods: Detailed explanation of interest calculation including examples

3. Schedule C - Form of Draw-Down Request: Standard form for requesting advances under the note

4. Schedule D - Security Details: If applicable, detailed description of security or collateral

5. Appendix 1 - Compliance Certificate: Standard form for periodic compliance certification

6. Appendix 2 - Notice Details: Contact information and acceptable methods of notice for all parties

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

Promissory Note

Sector

Banking

Cost

Free to use
Relevant legal definitions
Relevant Industries

Banking and Financial Services

Manufacturing

Real Estate and Construction

Information Technology

Retail and Consumer Goods

Healthcare

Infrastructure

Agriculture

Energy and Utilities

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Credit

Risk Management

Compliance

Corporate Secretarial

Business Development

Commercial

Accounts

Relevant Roles

Chief Financial Officer

Finance Director

Treasury Manager

Credit Manager

Legal Counsel

Corporate Lawyer

Finance Manager

Accounts Director

Risk Manager

Commercial Director

Business Development Manager

Company Secretary

Financial Controller

Banking Relationship Manager

Compliance Officer

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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