Banking & Finance
Comprehensive banking and finance practice serving lenders, borrowers, and financial institutions.
Overview
AMLEGALS provides sophisticated banking and finance advisory serving banks, NBFCs, funds, and corporate borrowers. Our practice spans loan documentation, security creation, debt restructuring, and NPA resolution. We understand the regulatory framework governing financial services and help clients navigate RBI regulations, SARFAESI, IBC, and sector-specific requirements.
Key Practice Areas
Loan Documentation
Term loans, working capital facilities, project finance, and syndicated lending documentation for lenders and borrowers.
Security Creation
Mortgage documentation, hypothecation, pledge arrangements, and security trustee structures across asset classes.
Debt Restructuring
OTR frameworks, resolution plans, inter-creditor agreements, and pre-IBC restructuring advisory.
NPA Resolution
SARFAESI proceedings, DRT litigation, IBC proceedings, and strategic advisory on stressed asset resolution.
Regulatory Compliance
RBI compliance, NBFC regulations, and regulatory advisory for financial services entities.
TCL Framework Application
Technical
Understanding borrower operations, asset characteristics, and project parameters to structure appropriate financing.
Commercial
Aligning documentation with commercial terms, managing risk allocation, and protecting lender or borrower interests.
Legal
Ensuring enforceability of security, compliance with regulations, and proper documentation of lending relationships.
Regulatory Framework
Industries Served
Frequently Asked Questions
When can SARFAESI be used for recovery?
SARFAESI applies to secured debts of Rs. 1 lakh or more where the secured asset is not agricultural land. The borrower must be given 60 days notice before enforcement. SARFAESI provides for possession, management, and sale of secured assets without court intervention.
What is the priority of charges in insolvency?
Under IBC, the waterfall follows: insolvency resolution costs, secured creditors, workmen dues (24 months), employee dues (12 months), unsecured creditors, government dues, remaining debts, preference shareholders, and equity shareholders.
How are inter-creditor arrangements structured?
Inter-creditor agreements govern relationships among multiple lenders, addressing decision-making, voting thresholds, information sharing, enforcement restrictions, and waterfall mechanisms. The structure depends on the financing arrangement and lender composition.
What types of security are commonly taken by lenders?
Common security includes mortgage over immovable property, hypothecation of movables, pledge of shares/securities, assignment of receivables, corporate guarantee, personal guarantee, and security trustee arrangements. Security package depends on borrower assets and lender requirements.
How does the RBI regulate NBFCs?
NBFCs are regulated under RBI's Scale Based Regulation framework categorizing them into Base Layer, Middle Layer, Upper Layer, and Top Layer with graduated compliance requirements. Key regulations cover capital adequacy, asset classification, provisioning, concentration norms, and governance.
What is the process for IBC proceedings?
Corporate Insolvency Resolution Process begins with admission of application by NCLT. Resolution Professional takes over management and invites resolution plans. Committee of Creditors evaluates plans with 66% approval threshold. Resolution or liquidation follows. Process timeline is 330 days including extensions.
How should loan documentation protect lender interests?
Key protections include comprehensive representations and warranties, financial covenants (leverage, coverage ratios), reporting requirements, event of default triggers, material adverse change provisions, cross-default clauses, and clear acceleration and enforcement rights.
What is the difference between pledge and hypothecation?
Pledge involves physical possession of movables by creditor. Hypothecation allows debtor to retain possession while creating charge in favor of creditor. Pledge provides stronger enforcement but is impractical for operating assets. Hypothecation requires registration for perfection.
How are project finance transactions structured?
Project finance involves non-recourse or limited recourse lending against project cash flows. Structure includes SPV borrower, security over project assets and contracts, step-in rights, escrow accounts, sponsor support, and detailed covenant package. Documentation is extensive covering construction and operational phases.
What debt restructuring options exist outside IBC?
Options include RBI's One-Time Restructuring framework, out-of-court workouts, debt conversion to equity, asset sales, refinancing, and pre-packaged schemes. Choice depends on viability, creditor composition, and commercial dynamics. Restructuring requires unanimous or majority creditor consent depending on structure.
How are security trusts used in lending?
Security trustees hold security on behalf of multiple lenders, simplifying documentation and enforcement. The security trustee agreement governs trustee powers, beneficiary rights, and enforcement procedures. Security trustees are essential for syndicated lending and bond issues with multiple holders.
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