Promissory Note And Security Agreement

Promissory Note And Security Agreement Template for India

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Key Requirements PROMPT example:

"Need a Promissory Note and Security Agreement for a manufacturing business loan of INR 50 lakhs, due March 15, 2025, secured by industrial equipment and machinery, with monthly installments and a 12% annual interest rate."

Document background

The Promissory Note and Security Agreement is a sophisticated financial instrument used in Indian lending transactions where both a formal promise to pay and collateral security are required. This document is particularly useful in situations where lenders need additional security beyond a simple promise to pay, commonly used in business loans, asset financing, and structured lending arrangements. The document must comply with multiple Indian laws including the Negotiable Instruments Act, 1881, the SARFAESI Act, 2002, and the Indian Contract Act, 1872. It typically includes comprehensive details about the loan amount, interest rates, payment schedules, collateral description, and enforcement mechanisms. The security component makes it more robust than a standard promissory note, providing lenders with specific rights over identified assets in case of default.

Suggested Sections

1. Parties: Identification of the maker (borrower) and the payee (lender) with complete details as required under Indian law

2. Background: Brief context of the loan arrangement and security being provided

3. Definitions: Key terms used throughout the agreement, including definition of secured obligations, collateral, and enforcement events

4. Promise to Pay: Unconditional promise to pay a specific sum with clear payment terms, interest rate, and maturity date as required by the Negotiable Instruments Act

5. Grant of Security Interest: Description of the security interest being created and the assets being pledged as collateral

6. Description of Secured Obligations: Detailed description of the obligations being secured, including principal, interest, and other charges

7. Representations and Warranties: Maker's declarations regarding ownership and right to pledge collateral

8. Covenants: Ongoing obligations of the maker regarding maintenance and protection of collateral

9. Events of Default: Circumstances that trigger default and enforcement rights

10. Enforcement Rights: Payee's rights and remedies upon default, compliant with SARFAESI Act where applicable

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

Optional Sections

1. Additional Security Provisions: Used when multiple assets or complex security arrangements are involved

2. Insurance Requirements: Required when the collateral needs specific insurance coverage

3. Guarantor Provisions: Included when a third party is guaranteeing the promissory note

4. Cross-Default Provisions: Used when the note is part of a larger financing arrangement

5. Assignment and Transfer: Included when the note needs to be transferable or assignable

6. Additional Representations: Required for specific types of collateral or complex security arrangements

Suggested Schedules

1. Schedule A - Collateral Description: Detailed description of all assets pledged as security

2. Schedule B - Payment Schedule: Amortization schedule or payment terms if installment payments are involved

3. Schedule C - Existing Encumbrances: List of any existing liens or encumbrances on the collateral

4. Appendix 1 - Form of Notice: Standard form for notices under the agreement

5. Appendix 2 - Security Perfection Requirements: List of filings and registrations required to perfect the security interest

6. Appendix 3 - Specimen Signatures: Signatures of authorized signatories for both parties

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

alex.den.21@genieai.co

Relevant legal definitions

Clauses

Relevant Industries

Banking and Financial Services

Real Estate

Manufacturing

Agriculture

Infrastructure

Small and Medium Enterprises

Retail

Technology

Healthcare

Education

Relevant Teams

Legal

Finance

Credit

Risk Management

Compliance

Treasury

Collections

Business Development

Account Management

Corporate Secretarial

Relevant Roles

Chief Financial Officer

Finance Manager

Legal Counsel

Credit Manager

Risk Manager

Loan Officer

Corporate Treasurer

Financial Controller

Compliance Officer

Security Trustee

Collections Manager

Business Development Manager

Account Manager

Find the exact document you need

Simple Security Agreement

An Indian law-governed agreement creating security interests over assets in favor of a lender/security holder, establishing terms for security creation, maintenance, and enforcement.

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Let's create your Promissory Note And Security Agreement

Authors

Alex Denne

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