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Securities Lending Agreement for India

Securities Lending Agreement Template for India

A comprehensive legal agreement governed by Indian law that establishes the framework for securities lending transactions between institutional parties. The document complies with SEBI and RBI regulations, detailing the terms and conditions for lending securities, including collateral requirements, rights and obligations of parties, fee structures, and operational procedures. It incorporates specific Indian regulatory requirements such as SEBI's Securities Lending Scheme guidelines and relevant provisions of the Securities Contracts (Regulation) Act, while addressing tax implications and stamp duty requirements under Indian law.

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Securities Lending Agreement

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What is a Securities Lending Agreement?

The Securities Lending Agreement serves as the primary contractual framework for securities lending transactions in the Indian market. This document is essential when institutional parties wish to engage in securities lending and borrowing activities under the regulatory framework established by SEBI and RBI. The agreement covers crucial aspects including loan initiation, collateral management, corporate actions, rights and obligations of parties, and default scenarios. It incorporates specific requirements from SEBI's Securities Lending Scheme guidelines, the Securities Contracts (Regulation) Act, and other relevant Indian regulations. The document is particularly relevant for financial institutions, custodians, and broker-dealers operating in India's securities market, providing them with a structured approach to securities lending while ensuring regulatory compliance.

What sections should be included in a Securities Lending Agreement?

1. Parties: Identification of the lender and borrower, including registration details and regulatory status

2. Background: Context of the agreement and regulatory framework under which it operates

3. Definitions and Interpretation: Comprehensive definitions of terms used in the agreement and interpretation rules

4. Loans of Securities: Core provisions governing the lending of securities, including initiation process and terms

5. Collateral Requirements: Details of required collateral, maintenance margins, and valuation methodology

6. Rights and Obligations: Specific duties and responsibilities of each party

7. Fees and Payments: Lending fees, payment mechanisms, and payment schedules

8. Tax and Stamp Duty: Tax implications and responsibilities for stamp duty payments

9. Corporate Actions: Handling of dividends, rights issues, and other corporate actions

10. Events of Default: Definition of default events and consequences

11. Close-out and Set-off: Procedures for termination and settlement of obligations

12. Representations and Warranties: Standard and specific representations by both parties

13. Indemnification: Indemnity provisions and liability limitations

14. Notices: Communication procedures and contact details

15. Governing Law and Jurisdiction: Indian law as governing law and jurisdiction details

What sections are optional to include in a Securities Lending Agreement?

1. Foreign Institutional Investor Provisions: Additional provisions when one party is a foreign institutional investor, including FEMA compliance

2. Multiple Borrower Arrangements: Provisions for managing multiple borrower relationships under one agreement

3. Electronic Trading Platform: Provisions for using electronic platforms for securities lending transactions

4. Agent Lender Provisions: Specific provisions when lending is conducted through an agent

5. Market Disruption: Provisions dealing with market disruption events

6. Netting Arrangements: Detailed netting provisions for multiple transactions

7. Credit Support Arrangements: Additional credit support provisions beyond basic collateral requirements

What schedules should be included in a Securities Lending Agreement?

1. Schedule 1 - Eligible Securities: List of securities eligible for lending under the agreement

2. Schedule 2 - Collateral Parameters: Detailed collateral requirements, haircuts, and valuation methodologies

3. Schedule 3 - Fee Schedule: Detailed fee structure and calculation methods

4. Schedule 4 - Standard Forms: Standard forms for borrowing requests, recalls, and other notices

5. Schedule 5 - Contact Details: Detailed contact information for both parties

6. Schedule 6 - Authorized Signatories: List of authorized signatories for both parties

7. Appendix A - Operating Procedures: Detailed operational procedures for lending and returning securities

8. Appendix B - Regulatory Confirmations: Required regulatory confirmations and compliance statements

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

Loan Agreement

Sector

Banking

Cost

Free to use
Relevant legal definitions


















































Clauses





































Relevant Industries

Banking

Financial Services

Investment Management

Securities Trading

Asset Management

Broker-Dealer Services

Custodial Services

Investment Banking

Insurance

Pension Fund Management

Relevant Teams

Legal

Compliance

Securities Operations

Trading

Risk Management

Portfolio Management

Treasury

Settlement

Documentation

Regulatory Affairs

Investment

Collateral Management

Relevant Roles

Legal Counsel

Compliance Officer

Securities Operations Manager

Trading Manager

Risk Manager

Portfolio Manager

Securities Lending Specialist

Collateral Manager

Operations Director

Chief Investment Officer

Head of Trading

Regulatory Affairs Manager

Treasury Manager

Settlement Officer

Documentation Specialist

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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