Standby Credit Agreement Template for India

The Standby Credit Agreement is a crucial financial instrument in Indian banking and commercial practice, commonly used to provide financial security in business transactions. It creates a contingent obligation where the issuing bank agrees to pay the beneficiary upon the occurrence of specified events, typically the non-performance or default of the applicant. This document is essential in various commercial contexts, from securing contract performance to supporting financial obligations. Under Indian jurisdiction, these agreements must comply with RBI guidelines, the Banking Regulation Act, and FEMA regulations when involving foreign currency. The agreement typically includes detailed provisions on drawing conditions, documentation requirements, fees, and compliance obligations, making it a comprehensive framework for standby credit arrangements.

1. Parties: Identification of the credit issuer (typically a bank), the applicant, and the beneficiary

2. Background: Context of the standby credit arrangement and the underlying transaction it supports

3. Definitions: Definitions of key terms used throughout the agreement

4. Facility Details: Amount, currency, and type of standby credit facility being provided

5. Purpose: Specified purpose for which the standby credit may be utilized

6. Conditions Precedent: Conditions that must be satisfied before the facility becomes effective

7. Drawing Requirements: Procedures and documentation required for drawing under the facility

8. Triggering Events: Circumstances under which the standby credit can be drawn upon

9. Fees and Charges: All applicable fees, charges, and commission structures

10. Representations and Warranties: Standard declarations by the applicant regarding their legal and financial status

11. Covenants: Ongoing obligations of the applicant during the facility period

12. Events of Default: Circumstances constituting default and their consequences

13. Indemnification: Applicant's obligations to indemnify the issuer

14. Communications: Methods and requirements for formal communications between parties

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