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Pre Financing Agreement for India

Pre Financing Agreement Template for India

A Pre-Financing Agreement under Indian law is a crucial financial instrument that establishes the terms and conditions for advance funding arrangements between parties. The document outlines the financing structure, disbursement conditions, repayment terms, and security arrangements while ensuring compliance with Indian financial regulations, including RBI guidelines and relevant banking laws. It includes specific provisions for interest calculations, default scenarios, and enforcement mechanisms, all structured within the framework of Indian contract law and financial regulations.

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Pre Financing Agreement

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What is a Pre Financing Agreement?

The Pre-Financing Agreement is essential in scenarios where parties require advance funding for projects, operations, or specific business activities. This document type is commonly used in India when a funding entity agrees to provide financing before the completion or commencement of a project or business activity. The agreement details the conditions for disbursement, repayment obligations, security arrangements, and compliance requirements under Indian law. It's particularly crucial in sectors requiring substantial upfront capital, such as infrastructure, real estate, and manufacturing. The document must comply with various Indian regulations, including the Indian Contract Act, 1872, banking regulations, and RBI guidelines, especially regarding interest rates, security creation, and enforcement mechanisms. The Pre-Financing Agreement serves as a foundational document that protects both the funder's and recipient's interests while ensuring legal enforceability.

What sections should be included in a Pre Financing Agreement?

1. Parties: Identifies and provides full details of all parties to the agreement, including their legal status and registered addresses

2. Background: Sets out the context of the agreement, including the purpose of the pre-financing and the relationship between the parties

3. Definitions: Defines key terms used throughout the agreement for clarity and consistency

4. Purpose and Scope: Details the specific purpose of the pre-financing and the scope of the agreement

5. Amount and Disbursement: Specifies the pre-financing amount and the terms and conditions for disbursement

6. Interest and Fees: Details the applicable interest rates, calculation methods, and any additional fees or charges

7. Repayment Terms: Specifies the repayment schedule, methods of payment, and prepayment provisions

8. Security and Collateral: Details any security or collateral provided to secure the pre-financing

9. Representations and Warranties: Lists the representations and warranties made by each party

10. Covenants: Sets out the positive and negative obligations of the parties during the agreement term

11. Events of Default: Defines what constitutes default and the consequences thereof

12. Remedies: Specifies the rights and remedies available to parties in case of default or breach

13. Governing Law and Jurisdiction: Specifies Indian law as governing law and establishes jurisdiction for dispute resolution

14. Notices: Specifies how formal communications between parties should be made and delivered

15. Boilerplate Provisions: Standard clauses including severability, entire agreement, amendments, and counterparts

What sections are optional to include in a Pre Financing Agreement?

1. Conditions Precedent: Used when there are specific conditions that must be met before the agreement becomes effective or before disbursement

2. Currency Provisions: Required when the pre-financing involves foreign currency or cross-border elements

3. Tax Provisions: Detailed tax clauses needed when specific tax implications need to be addressed

4. Assignment and Transfer: Include when parties want to specifically address the ability to transfer rights or obligations

5. Force Majeure: Include when parties want specific provisions for unforeseen circumstances affecting performance

6. Step-In Rights: Used when lenders require the right to take control of specific assets or projects

7. Insurance Requirements: Include when specific insurance coverage is required as part of the arrangement

8. Regulatory Compliance: Detailed compliance provisions needed when dealing with regulated entities or activities

What schedules should be included in a Pre Financing Agreement?

1. Schedule 1 - Disbursement Schedule: Detailed breakdown of the disbursement timeline and conditions

2. Schedule 2 - Repayment Schedule: Detailed amortization schedule showing payment dates and amounts

3. Schedule 3 - Security Details: Comprehensive description of all security or collateral provided

4. Schedule 4 - Conditions Precedent Documents: List of all documents required before effectiveness or disbursement

5. Schedule 5 - Form of Disbursement Request: Template for requesting disbursement under the agreement

6. Schedule 6 - Contact Details: Detailed contact information for all parties and authorized representatives

7. Appendix A - Calculation of Interest and Fees: Detailed methodology for calculating interest and other charges

8. Appendix B - Required Authorizations: List of all required regulatory and corporate authorizations

Authors

Alex Denne

Head of Growth (Open Source Law) @ Ƶ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

India

Publisher

Ƶ

Document Type

Finance Agreement

Cost

Free to use
Relevant legal definitions











































Clauses









































Relevant Industries

Infrastructure

Real Estate

Manufacturing

Technology

Renewable Energy

Export-Import

Construction

Healthcare

Education

Transportation

Mining

Agriculture

Telecommunications

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Project Management

Commercial

Business Development

Corporate Secretarial

Credit

Operations

Relevant Roles

Chief Financial Officer

Finance Director

Legal Counsel

Corporate Lawyer

Finance Manager

Project Manager

Treasury Manager

Risk Manager

Commercial Director

Business Development Manager

Financial Controller

Compliance Officer

Company Secretary

Investment Manager

Credit Manager

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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