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Loan Purchase And Sale Agreement Template for India

A comprehensive legal agreement governed by Indian law that facilitates the transfer of loan portfolios from one entity to another. The document outlines the terms and conditions of the sale, including purchase price, representations and warranties, conditions precedent, and completion mechanics. It incorporates compliance requirements under various Indian financial regulations, including the Transfer of Property Act, Banking Regulation Act, and SARFAESI Act where applicable. The agreement provides detailed mechanisms for the transfer of loan documentation, security interests, and ongoing obligations of both parties.

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What is a Loan Purchase And Sale Agreement?

The Loan Purchase and Sale Agreement is a critical document used in Indian financial markets when one entity wishes to transfer its loan portfolio to another. This transaction type is common in scenarios such as bank portfolio optimization, non-performing asset sales, or strategic restructuring of loan books. The agreement must comply with Indian banking and financial services regulations, including RBI guidelines, and typically includes detailed provisions for the transfer of loans, associated security interests, and servicing arrangements. It's particularly relevant in the context of asset reconstruction, debt trading, and financial institution portfolio management. The document needs to address specific Indian legal requirements regarding assignment of debt, stamp duty implications, and registration requirements where applicable.

What sections should be included in a Loan Purchase And Sale Agreement?

1. Parties: Identification of the seller and purchaser of the loans, including their legal status and registered addresses

2. Background: Context of the transaction, including the existence of the loans being sold and the parties' intention to enter into the purchase transaction

3. Definitions and Interpretation: Definitions of key terms used throughout the agreement and rules of interpretation

4. Sale and Purchase: Core transaction terms including the agreement to sell and purchase the loans, purchase price, and payment terms

5. Conditions Precedent: Conditions that must be satisfied before the agreement becomes effective or before closing

6. Completion: Details of the closing process, including timing, location, and actions required of each party

7. Representations and Warranties of the Seller: Seller's confirmations regarding the loans, their status, and the seller's authority to sell

8. Representations and Warranties of the Purchaser: Purchaser's confirmations regarding its authority and capacity to purchase

9. Covenants: Ongoing obligations of the parties post-completion

10. Transfer Mechanics: Procedural requirements for effecting the transfer of loans

11. Indemnification: Provisions for compensation in case of breach or misrepresentation

12. Confidentiality: Obligations regarding confidential information

13. Notices: Process and requirements for formal communications between parties

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

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

What sections are optional to include in a Loan Purchase And Sale Agreement?

1. Security Transfer: Required when the loans being purchased are secured loans and include transfer of associated security interests

2. Servicing Arrangements: Needed when the seller will continue to service the loans post-sale or when specifying transition to a new servicer

3. True Sale Provisions: Important for securitization transactions or when bankruptcy remoteness is required

4. Regulatory Compliance: Required for regulated entities or when specific regulatory requirements apply to the transaction

5. Data Protection: Needed when personal data of borrowers is involved in the transfer

6. Foreign Exchange Compliance: Required when the transaction involves cross-border elements or foreign currency

7. Third Party Consents: Needed when the transfer requires consent from borrowers or other third parties

What schedules should be included in a Loan Purchase And Sale Agreement?

1. Schedule 1 - Loan Schedule: Detailed list of loans being purchased, including key information such as outstanding amounts, interest rates, and maturity dates

2. Schedule 2 - Form of Transfer Documents: Template documents required to effect the transfer of loans

3. Schedule 3 - Completion Checklist: List of documents and actions required at completion

4. Schedule 4 - Seller's Power of Attorney: Form of power of attorney authorizing the purchaser to take necessary actions regarding the transferred loans

5. Schedule 5 - Loan Documents: List of all relevant loan documentation being transferred

6. Schedule 6 - Purchase Price Calculation: Methodology and details for calculating the purchase price

7. Appendix A - Compliance Requirements: Detailed regulatory and compliance requirements applicable to the transaction

8. Appendix B - Service Level Requirements: Details of any ongoing servicing arrangements 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

Jurisdiction

India

Publisher

Genie AI

Document Type

Loan Agreement

Sector

Banking

Cost

Free to use

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