Document background
The Loan Indemnity Agreement serves as a critical risk mitigation tool in Nigerian lending transactions, providing additional security to lenders beyond the primary loan agreement. This document becomes essential when there's a need for enhanced protection of the lender's interests, particularly in high-value loans, corporate financing, or situations with heightened risk profiles. The agreement, governed by Nigerian law and compliant with local banking regulations, typically details the scope of indemnity, trigger events, payment obligations, and enforcement mechanisms. It's commonly used alongside main loan agreements, especially when the original borrower's creditworthiness needs to be supplemented or when complex corporate structures require additional security layers.
