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The Employee Loan Agreement And Promissory Note is utilized when an employer in India extends a loan to an employee as part of their benefits package or to address specific financial needs. This document serves a dual purpose: it creates a legally binding loan agreement while incorporating a promissory note that complies with the Negotiable Instruments Act, 1881. The agreement typically includes details about the loan amount, purpose, repayment schedule (often through salary deductions), applicable interest rates, and provisions for early repayment or employment termination. It's essential for protecting both employer and employee interests while ensuring compliance with Indian financial, employment, and contract laws. The document is particularly relevant when companies offer financial assistance to employees for purposes such as housing, education, or personal emergencies.

1. Parties: Identifies the employer (lender) and employee (borrower) with full legal names and addresses

2. Background: Establishes the employment relationship and context for the loan request

3. Definitions: Defines key terms used throughout the agreement

4. Loan Amount and Purpose: Specifies the principal amount, purpose of the loan, and any conditions precedent

5. Interest Rate: Details the applicable interest rate (if any) and calculation method

6. Repayment Terms: Specifies payment schedule, installment amounts, and method of payment (typically salary deduction)

7. Promissory Note: Contains the formal promissory note language as required by law

8. Early Repayment: Terms and conditions for early loan repayment

9. Default and Consequences: Defines events of default and resulting consequences

10. Employment Termination: Handling of loan repayment in case of employment termination

11. Representations and Warranties: Standard declarations by the employee regarding their capacity and understanding

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