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Loan Purchase Agreement for India

Loan Purchase Agreement Template for India

A comprehensive legal agreement governed by Indian law that documents the sale and transfer of loans from one financial institution to another. The agreement covers crucial aspects including the purchase price, representations and warranties, transfer mechanics, and ongoing obligations of both parties. It must comply with Indian banking regulations, including RBI guidelines, and addresses key requirements under the Transfer of Property Act, Banking Regulation Act, and other relevant Indian legislation. The document typically includes detailed schedules specifying the loan portfolio characteristics, transfer documentation, and completion requirements.

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Loan Purchase Agreement

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What is a Loan Purchase Agreement?

This document is essential for financial institutions engaged in loan portfolio transactions in India. A Loan Purchase Agreement is used when one financial institution wishes to sell part or all of its loan portfolio to another institution, whether for strategic realignment, regulatory compliance, or portfolio management purposes. The agreement must comply with Indian regulatory requirements, including RBI guidelines on loan transfers, and typically involves significant due diligence on the loan portfolio. It's particularly relevant in scenarios involving debt trading, non-performing asset sales, or strategic portfolio acquisitions. The document needs to address specific Indian legal requirements regarding assignment of actionable claims, stamp duty implications, and registration requirements where applicable. It includes comprehensive details about the loans being transferred, purchase price mechanisms, representations about the loan quality, and the process for effecting the transfer.

What sections should be included in a Loan Purchase Agreement?

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

2. Background: Explains the context of the transaction, including the seller's ownership of the loans and the purchaser's intention to acquire them

3. Definitions and Interpretation: Defines key terms used throughout the agreement and sets out interpretation rules

4. Sale and Purchase: Details the agreement to sell and purchase the loans, including the effective date of transfer

5. Purchase Price: Specifies the purchase price, calculation method, and any adjustments

6. Completion: Sets out the completion mechanics, including timing, location, and actions required

7. Representations and Warranties: Contains representations and warranties from both parties, particularly regarding the loans' status

8. Transfer Mechanics: Details the process for transferring the loans, including documentation requirements

9. Seller's Undertakings: Outlines the seller's ongoing obligations regarding the loans

10. Confidentiality: Establishes confidentiality obligations regarding the transaction and loan information

11. Notices: Specifies how formal notices under the agreement should be given

12. Governing Law and Jurisdiction: Specifies Indian law as governing law and sets out jurisdiction for disputes

13. Boilerplate Provisions: Standard contractual provisions including severability, entire agreement, and amendments

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

1. Security Assignment: Required when the loans being purchased are secured and the security needs to be transferred

2. Regulatory Compliance: Needed when either party is regulated or the transaction requires specific regulatory approvals

3. True Sale Provisions: Important when the transaction needs to be structured as a true sale rather than a secured financing

4. Servicing Arrangements: Required when the seller will continue to service the loans post-purchase

5. Buy-Back Provisions: Optional section allowing for buy-back of loans under specified circumstances

6. Data Protection: Required when personal data is involved in the transfer

7. Tax Provisions: Detailed tax provisions when complex tax implications exist

8. Foreign Exchange Provisions: Required when the transaction involves cross-border elements

What schedules should be included in a Loan Purchase Agreement?

1. Schedule 1 - Loan Portfolio Details: Detailed list of loans being purchased, including key information about each loan

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

3. Schedule 3 - Seller's Power of Attorney: Form of power of attorney allowing purchaser to take actions in seller's name

4. Schedule 4 - Completion Requirements: Detailed list of documents and actions required for completion

5. Schedule 5 - Seller's Warranties: Detailed warranties regarding the loans and their status

6. Schedule 6 - Eligibility Criteria: Criteria that loans must meet to be included in the purchase

7. Appendix A - Definitions: Detailed definitions of terms used in the agreement

8. Appendix B - Calculation of Purchase Price: Detailed methodology for calculating the purchase price

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

Asset Management

Non-Banking Financial Companies (NBFCs)

Debt Collection

Private Equity

Insurance

Distressed Asset Management

Corporate Finance

Relevant Teams

Legal

Finance

Treasury

Risk Management

Compliance

Credit

Portfolio Management

Operations

Investment

Due Diligence

Corporate Development

Loan Administration

Documentation

Deal Advisory

Asset Management

Relevant Roles

Chief Financial Officer

Head of Treasury

Portfolio Manager

Legal Counsel

Compliance Officer

Risk Manager

Credit Manager

Investment Director

Debt Trading Manager

Transaction Manager

Due Diligence Officer

Corporate Finance Manager

Loan Operations Manager

Asset Manager

Chief Risk Officer

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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