Pari-Passu Agreement
Legal contract binding all lending consortium members and the borrower regarding shared security ranking.
Agreement Designer
Step 1 of 32026 Compliance
Pari-Passu ranking must now be explicitly registered with NeSL for digital charge recognition.
- Ensures proportional distribution of recovery proceeds.
- Custody remains with Lead Bank under modern DDE protocols.
Legal Takeaways
No preference in ranking despite dates of individual bank sanctions.
Joint charge creation requires unified ROC filing (Form CHG-1).
Legal Document Draft
PARI-PASSU AGREEMENT
THIS AGREEMENT made this 12th day of October 2026 AMONG:
1. ABC Infrastructure Ltd., a Company incorporated under the Companies Act, having its Registered Office at 123, Business Park, Phase II, Mumbai - 400001 (CIN: L26942MH1999PLC123456 | LEI: 335800N92H7K9A6J0214) (hereinafter called "the Borrower") of the ONE PART;
2. State Bank of India, a Body Corporate constituted under the Banking Companies Act, having its Head Office at Madam Cama Road, Nariman Point, Mumbai (hereinafter called "the Lead Bank") of the SECOND PART;
3. HDFC Bank Ltd., having its Registered Office as specified in the Schedule (hereinafter called "the Participating Bank") of the THIRD PART.
WHEREAS:
A. By a Joint Equitable Mortgage created, the Borrower has created a mortgage in favour of the Lead Bank and Participating Bank to secure the Term Loan of INR 1,500,000,000.00.
B. It is agreed between the parties that the charges created by the Borrower in favour of the Lead Bank and the Participating Bank shall rank pari passu (equally) without any preference or priority for one over the other.
NOW THIS AGREEMENT WITNESSETH:
1. PARI PASSU RANKING
Notwithstanding the dates of execution of documents or creation of mortgages, the debts due to the Lead Bank and Participating Bank shall rank pari passu in all respects against the secured assets under the 2026 NeSL Charge Creation Protocols.
2. CUSTODY OF DOCUMENTS
The Title Deeds of the mortgaged properties shall legally remain in the custody of the Lead Bank acting as custodian for all consortium members and for the purpose of statutory filing with ROC.
3. CONSORTIUM SCHEDULE
1. State Bank of India - Rs. 500 Cr 2. HDFC Bank Ltd - Rs. 400 Cr 3. ICICI Bank Ltd - Rs. 350 Cr 4. Axis Bank Ltd - Rs. 250 Cr
This agreement is electronically validated for submission to NeSL under the Digital Document Execution (DDE) framework.
Want to know the difference between a Pari Passu Agreement and a Pari Passu Letter? Check our detailed side-by-side legal comparison, procedural roles, and stamp duty requirements on the letter page.
FAQs on Pari Passu Agreements
Legal and operational insights for credit documentation officers and consortium managers.
What is a Pari Passu Agreement in consortium lending?
A Pari Passu Agreement is a formal, legally binding multipartite contract executed between the corporate borrower, the lead bank, and all participating lenders. It legally covenants that all member banks hold equal, proportionate rights over hypothecated assets and mortgaged properties without any priority of one bank over another.
How does a Pari Passu Agreement differ from a Pari Passu Letter?
While a Pari Passu Letter serves as an interim consent/NOC from an existing lender to allow credit disbursement and ROC charge creation, the Pari Passu Agreement is the final, fully stamped and executed legal contract detailing recovery waterfalls, lead bank custody of title deeds, NeSL registration, and joint enforcement rights.
Who holds custody of original title deeds under a Pari Passu Agreement?
Under standard consortium agreements, the Lead Bank acts as custodian and holds all original title deeds, documents of title, and hypothecation deeds on trust for the benefit of all participating member banks.
How are loan recovery proceeds shared under a Pari Passu Agreement?
All realization proceeds from the sale or liquidation of secured movable and immovable assets are distributed strictly in proportion to each bank's outstanding principal and interest exposure (pro-rata basis).
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