Document background
The Working Capital Facility Agreement is a fundamental financing document used when businesses in India require short-term funding for their day-to-day operations. It's particularly crucial for companies seeking to finance their working capital cycle, including inventory, receivables, and operational expenses. The agreement must comply with Indian banking regulations, particularly RBI guidelines, and typically includes provisions for facility limits, drawdown mechanisms, security arrangements, and borrower obligations. It's designed to protect both lender and borrower interests while ensuring smooth access to working capital. The document becomes especially important in the Indian context where working capital management is critical for businesses dealing with longer payment cycles and seasonal business fluctuations. The agreement's structure accommodates various forms of working capital facilities such as cash credit, overdraft facilities, and bill discounting, all while maintaining compliance with local regulatory requirements.
