The Loan Modification Agreement is a critical document used when parties need to alter the terms of an existing loan arrangement in Pakistan. It becomes necessary when circumstances require adjustments to original loan terms, such as during financial restructuring, changes in market conditions, or when borrowers face temporary financial challenges. The agreement must comply with Pakistani banking laws, including the Banking Companies Ordinance 1962 and relevant State Bank of Pakistan regulations. For Islamic banking facilities, additional Sharia compliance considerations apply. The document typically details revised payment schedules, interest rates, loan tenure, and any changes to security arrangements, while preserving other terms of the original agreement.

1. Parties: Identification of the lender and borrower, including their complete legal names, addresses, and registration details

2. Background: Recitals describing the original loan agreement, reasons for modification, and current status of the loan

3. Definitions: Definitions of key terms used in the agreement, including reference to definitions from the original loan agreement

4. Acknowledgment of Existing Debt: Confirmation of the current outstanding loan amount and status of the existing obligations

5. Modifications to Loan Terms: Detailed description of specific changes to the original loan terms (e.g., interest rate, repayment schedule, loan tenure)

6. Effective Date: Specification of when the modifications will take effect

7. Continuation of Original Agreement: Confirmation that all unmodified terms of the original agreement remain in full force and effect

8. Representations and Warranties: Updated representations and warranties from the borrower regarding their current financial condition

9. Conditions Precedent: Conditions that must be satisfied before the modification becomes effective

10. Governing Law and Jurisdiction: Confirmation of Pakistani law as governing law and specification of jurisdiction for disputes

11. Execution: Signature blocks and execution requirements