The Bank Facilities Letter is a crucial document in Indian banking practice, used when a bank agrees to extend credit facilities to a borrower following credit evaluation and approval. It serves as the primary document evidencing the terms and conditions of the banking relationship, typically issued after internal credit approval but before the disbursement of facilities. The letter comprehensively outlines the approved facilities, pricing, security structure, key conditions, and operational requirements, complying with Indian banking regulations and RBI guidelines. This document is essential for both new facility arrangements and renewals or modifications of existing facilities, forming the foundation of the banker-borrower relationship. The document must adhere to Indian banking laws and regulations, including the Banking Regulation Act, 1949, and related RBI directives.
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1. Bank Details and Date: Letterhead with bank details and date of the facility letter
2. Addressee Details: Complete details of the borrower including name, address, and any reference numbers
3. Reference Line: Subject line indicating the nature of facilities being offered
4. Salutation and Introduction: Formal greeting and introductory paragraph referencing any previous discussions or applications
5. Facility Details: Type of facility, amount, purpose, and tenure
6. Interest Rate and Fees: Applicable interest rates, processing fees, and other charges
7. Security Structure: Details of required security, collateral, and guarantees
8. Key Terms and Conditions: Essential conditions including financial covenants, representations, and warranties
9. Conditions Precedent: Conditions to be satisfied before facility drawdown
10. Events of Default: Circumstances constituting default and consequences
11. Undertakings: Borrower's ongoing obligations and commitments
12. Bank's Rights: Bank's rights regarding facility review, modification, and termination
13. Acceptance Block: Space for borrower's acknowledgment and acceptance of terms
14. Signing Block: Bank's authorized signatory details and signature space
1. Foreign Exchange Provisions: Required when facility involves foreign currency transactions
2. Insurance Requirements: Detailed when specific insurance coverage is required for the facility
3. Syndication Rights: Included for large facilities where bank may want to syndicate the loan
4. Digital Banking Provisions: When electronic/online banking services are part of the facility
5. Cross-Default Provisions: When borrower has multiple facilities or relationships with the bank
6. Group Company Provisions: When facility terms are linked to group company performance or obligations
7. Special Regulatory Compliance: For regulated industries or special purpose facilities
1. Facility Summary Schedule: Detailed breakdown of all facilities, limits, and sub-limits
2. Fee Schedule: Comprehensive list of all applicable fees and charges
3. Security Details Schedule: Detailed description of all security items and their values
4. Condition Precedent Documents: List of required documents and conditions to be fulfilled
5. Standard Form Drawdown Notice: Template for facility utilization requests
6. Compliance Certificate Format: Standard format for periodic compliance reporting
7. Financial Covenants Schedule: Detailed financial ratios and reporting requirements
8. Know Your Customer Requirements: List of required KYC documents and verifications
Relevant legal definitions
Clauses
Relevant Industries
Banking and Financial Services
Manufacturing
Real Estate
Information Technology
Healthcare
Retail
Infrastructure
Agriculture
Education
Hospitality
Logistics
Energy
Telecommunications
Mining
Construction
Relevant Teams
Legal
Finance
Treasury
Credit
Risk Management
Compliance
Corporate Banking
Operations
Credit Administration
Documentation
Relevant Roles
Chief Financial Officer
Finance Director
Treasury Manager
Financial Controller
Bank Relationship Manager
Credit Manager
Legal Counsel
Company Secretary
Managing Director
Chief Executive Officer
Finance Manager
Accounts Manager
Risk Manager
Compliance Officer
Credit Analyst
Banking Operations Manager
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