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Loan Guarantee Form for India

Loan Guarantee Form Template for India

A legally binding document governed by Indian law, specifically the Indian Contract Act 1872, where a guarantor undertakes to be responsible for the debt, default, or financial obligations of a borrower to a lender. The document establishes the terms and conditions under which the guarantee is provided, including the scope of the guarantee, enforcement mechanisms, and the rights and obligations of all parties involved. It serves as a critical security instrument in lending transactions, providing additional comfort to lenders by having a third party guarantee the borrower's obligations.

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What is a Loan Guarantee Form?

The Loan Guarantee Form is a crucial legal document used in Indian lending transactions when a third party (guarantor) agrees to secure the financial obligations of a borrower. This document is essential when lenders require additional security beyond the borrower's own creditworthiness or assets. Governed by the Indian Contract Act 1872 and related banking regulations, the guarantee form outlines the guarantor's obligations, the scope of the guarantee, enforcement mechanisms, and the circumstances under which the guarantee can be invoked. It's commonly used in both corporate and individual lending scenarios, particularly when the borrower's credentials alone may not meet the lender's risk assessment criteria. The document must comply with Indian stamp duty requirements and may need registration depending on the jurisdiction and guarantee amount.

What sections should be included in a Loan Guarantee Form?

1. Parties: Identifies the Guarantor, the Lender (Creditor), and the Borrower (Principal Debtor)

2. Background: Describes the underlying loan agreement and the context for the guarantee

3. Definitions: Defines key terms used throughout the guarantee document

4. Guarantee and Indemnity: Core section detailing the guarantee obligations and indemnification provisions

5. Scope of Guarantee: Specifies the extent of the guaranteed obligations and any limitations

6. Guarantor's Representations and Warranties: Statements about the guarantor's capacity and authority to provide the guarantee

7. Continuing Security: Establishes that the guarantee remains in force until all obligations are discharged

8. Enforcement: Details when and how the guarantee can be enforced

9. Payments: Specifies payment obligations, timing, and method

10. Costs and Expenses: Allocation of costs related to the guarantee

11. Notices: Communication procedures between parties

12. Governing Law and Jurisdiction: Specifies Indian law as governing law and jurisdiction for disputes

What sections are optional to include in a Loan Guarantee Form?

1. Multiple Guarantors: Include when there is more than one guarantor, defining joint and several liability

2. Corporate Guarantor Provisions: Include when the guarantor is a company, adding corporate authority provisions

3. Security Provisions: Include when the guarantee is secured by specific assets

4. Assignment and Transfer: Include when parties want to allow transfer of guarantee rights

5. Currency Provisions: Include for cross-border transactions involving multiple currencies

6. Priority and Subordination: Include when there are multiple guarantees or security interests

7. Force Majeure: Include when parties want specific provisions for unforeseen circumstances

What schedules should be included in a Loan Guarantee Form?

1. Schedule 1 - Principal Loan Agreement Details: Details of the underlying loan agreement being guaranteed

2. Schedule 2 - Guaranteed Obligations: Detailed description of the obligations covered by the guarantee

3. Schedule 3 - Form of Demand: Standard form for making a demand under the guarantee

4. Schedule 4 - Guarantor's Assets: List of guarantor's assets (if relevant for enforcement)

5. Appendix A - Board Resolution: Corporate authorization (for corporate guarantors)

6. Appendix B - Security Documents: Copies of related security documents (if applicable)

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

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions






























Clauses




























Relevant Industries

Banking

Financial Services

Corporate Finance

Real Estate

Infrastructure

Manufacturing

Trading

Small and Medium Enterprises

Retail

Construction

Relevant Teams

Legal

Finance

Risk Management

Credit

Compliance

Treasury

Banking Operations

Documentation

Corporate Affairs

Loan Administration

Relevant Roles

Legal Counsel

Corporate Lawyer

Finance Manager

Credit Risk Manager

Loan Officer

Relationship Manager

Compliance Officer

Chief Financial Officer

Treasury Manager

Banking Operations Manager

Credit Analyst

Legal Documentation Specialist

Company Secretary

Risk Assessment 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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