Consortium
Legal Documentation
Establishing legal clarity through Inter-Se agreements, Pari-Passu charge creation, and digital collateral management.
Understanding Pari-Passu Rights
Documentation under consortium arrangements ensures the conferring of charges in favor of all participating banks. These legal rights are **Pari-Passu** in nature, meaning "in proportion to."
Ratio-Based Security: In the event of security enforcement, realizations are shared proportional to the aggregate outstandings of each member bank.
Ratio-Based
Sharing of Limits & Security
Inter-Se Agreement: The Consortium Charter
The Inter-Se Agreement is the bedrock of the consortium, establishing the internal relationship among participating banks.
Working Capital Advances
Security for working capital is typically managed through concurrent pledge or hypothecation mechanisms:
Pledge Mechanisms
Joint Pledge involves one bank managing physical goods on behalf of the consortium with pro-rata deliveries.
Cash Credit (Hypothecation)
The industry standard. Involves joint hypothecation deeds and registered **NeSL** charge creation.
Term Loan & Project Finance
Security Layering:
- First charge on movable machinery via Joint Hypothecation.
- First charge on Fixed Assets (Land/Buildings) via Joint Mortgage.
- NeSL Digital Recording: Mandatory recording of debt and charge via National E-Governance Services Ltd.
2026 ESG Covenants:
- Inclusion of **Sustainability-linked Covenants** in common loan agreements.
- Mandatory disclosure of climate risk metrics for high-impact industrial borrowers.
Standardized Consortium Templates
Access the latest 2026-compliant legal drafts for consortium execution: