Loan Agreement



THIS AGREEMENT is made the ____ day of ________________, 2006:


X BANK LIMITED, Gulshan Branch, Metropolitan Shopping Plaza (1st floor), Gulshan Circle-2, Dhaka – 1212, (hereinafter referred to as “Bank”) which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns of the ONE PART.


COMPANY 1(COMPANY 1), a non-governmental organisation, incorporated under the relevant laws of Bangladesh having its office at _______________________________ (hereinafter referred to as “Borrower”) which expression unless excluded by or repugnant to the context will mean and include its successor-in-interest, legal representatives, administrators, assigns of the OTHER PART.


The Borrower carries on the business of finance micro credit lending program and pursuant to its request the Bank has agreed to grant a Working Capital Facility of a maximum amount of Tk. 15,00,00,000.00 (Taka fifteen crore) only under the terms and conditions set forth hereunder.



In this Agreement, the following capitalised expressions shall have (save where the context otherwise requires) the meanings respectively attributed to them:

ADVANCE’ means each advance made or to be made following delivery of a drawing notice valid in all respects under Clause 3.3.

AVAILABILITY PERIOD’ means 01 year from the date of execution of this Agreement.

BANK BASIS’ means the basis calculated by using a multiplier consisting of the actual number of days elapsed divided by 365.

BUSINESS DAY’ means a day on which banks and financial institutions are open for business.

ENCUMBRANCE’ means any mortgage, charge, pledge, lien, assignment, hypothecation, title retention, right of set-off or any security interest whatsoever, howsoever created or arising and whether relating to existing or future assets.

EVENT OF DEFAULT’ means any of the events mentioned in Clause 10.

FACILITY’ means the Working Capital Facility.

INTEREST PAYMENT DATES’ shall mean the first Interest Payment Date and each of the other Interest Payment Dates, which fall on the usual yearly quarter days, being 30 September, 31 December, 30 March and 30 June.

LOAN’ means the aggregate Advance granted by the Bank under the Working Capital Facility and for the time being outstanding.

LOAN DOCUMENTS’ means all the agreements, deeds, instruments and documents executed between the Borrower and the Bank or in favour of the Bank, including the Security Documents, for effecting the Working Capital Facility contemplated hereunder.

PRINCIPAL REPAYMENT DATES means the first Principal Repayment Date, commencing from the end of ____________ and ending on _________ in accordance to Clause 6 hereunder.

‘SECURITY DOCUMENT’ means the documents as described in the Schedule A below.

TAXES’ includes all present and future taxes, levies, imposts, deductions, charges, stamp duties, and withholdings whatsoever, including all liabilities in respect thereto.

WORKING CAPITAL FACILITY or ‘WORKING CAPITAL LOAN’ means the facility granted in favour of the Borrower as described in Clause 2.

2.         THE FACILITY

2.1.      The Bank hereby agrees to grant to The Borrower a Working Capital Facility of a maximum amount of Tk. 15,00,00,000.00 (Taka fifteen crore) only.


3.1       The Bank shall, subject to the terms of this Agreement, make available during the Availability Period the Facility to The Borrower.

3.2              The Working Capital Facility will be disbursed in accordance to the requirement of the Borrower from time to time.

4.                  VALIDITY PERIOD

The validity of the Working Capital Facility shall be for a period up to twelve (12) months from the date of first disbursement and renewable upon the mutual agreement between the Bank and the Borrower.


5.1              The Facility shall be subject to interest payable at 13.00% p.a. on quarterly rests which shall be charged from the date of the first disbursement of the Working Capital Loan. Interest shall be payable at the end of each quarter on the Interest Payment Dates.

5.2              Interest shall accrue from day to day calculated on Bank Basis and if any Interest Payment Date falls on a non Business Day, interest shall be payable on the next succeeding Business Day.

6.         REPAYMENT

6.1              The Working Capital Facility shall be fully adjusted by the Borrower in lumpsum from time to time and full adjustment shall be made within the Validity Period.

6.2              If any Principal Repayment Date falls on a non Business Day, repayment shall be payable on the next succeeding Business Day.

6.3              If the Borrower fails to pay any amount in accordance with this Agreement, the Borrower shall pay interest on that amount from the date of default up to the date of actual payment at the rate of ________ above the interest rate determined in Clause 5.1. Such interest shall be payable at the end of each such designated period and so long as the sum remains unpaid, such rate shall be re-calculated on the same basis at the end of such period and notified by the Bank to the Borrower.


7.1              Notwithstanding anything herein contained, the Working Capital Facility will become available to the Borrower only when the Bank has received in form and substance satisfactory to it:

7.1.1        A certified copy of the Memorandum and Articles of Association of The Borrower as amended to date and the copy of last Annual Return (Schedule X) and Particulars of Directors (Form XII) certified from RJSC;

7.1.2        Approval by the Board of Directors of The Borrower for borrowing of the Working Capital Loan, execution of this Agreement and all other related documents in this transaction;

7.1.3        Specimen signatures of the authorised signatories of the Borrower;

7.1.4        evidence that the Borrower has obtained or will obtain all governmental and other authorisations, approvals, licences and consents from relevant governmental and other regulatory authorities necessary for the execution, performance and validity of this Agreement, the other Loan and Security Documents; and

7.1.5        Execution and perfection of the Loan Documents.


8.1              The Borrower acknowledges that the Bank has entered into this Agreement in reliance on representations by The Borrower in the following terms and The Borrower hereby accordingly warrants and represents that:

8.1.1        The Borrower has power under its constitution to enter into this Agreement and all other documents contemplated thereby and all corporate or other action required to authorize the execution and performance by The Borrower of its obligations thereunder has been duly taken;

8.1.2        no litigation, arbitration or administrative proceeding or claim which might by itself or together with any other such proceedings or claims have a material adverse effect on its ability to observe or perform its obligation under this Agreement;

8.1.3        the audited financial statements (including the income statement and balance sheet) of The Borrower for the year ended 31st December of each year have been prepared in accordance with accounting principles generally accepted in Bangladesh and consistently applied, give a true and fair view of the results of its operations for that year and the state of its affairs at that date and, in particular, accurately disclose the liabilities of The Borrower;

8.1.4        to the Borrower’s knowledge no legal proceedings has commenced or is threatened against the Borrower for its winding up, dissolution or reorganization or for the appointment of a receiver, administrator, trustee or similar officer to the Borrower or any or all of its assets and undertaking;

8.1.5        the Borrower has disclosed fully in writing to the Bank all facts relating to it which it knows or should reasonably know and which are material for disclosure to the Bank in the context of this Agreement;

8.1.6        neither the Borrower nor any of its members of executive committee or governing body, as the case may be,, either directly or indirectly, engage in activity related to Money Laundering. For avoidance of doubt Money Laundering means but not limited to illegal drug trafficking, child prostitution, arms and ammunition selling to terrorist group and any other activities defined as Money Laundering under the Money Laundering Act of 2002;

8.1.7        all license granted to the Borrower by the relevant regulatory authorities have been granted in due process of law to the best knowledge of the Borrower; and

8.1.8        all information supplied by the Borrower to the Bank in connection with availing the Credit Facilities is correct.

9.         COVENANTS

9.1       The Borrower covenants with the Bank that, from the date hereof until all its liabilities under this Agreement have been discharged:

9.1.1        The Borrower shall bear all stamp duties, registration fees and other governmental charges incurred or assessed on or in respect of this Agreement, the Security Document and all other documents in contemplation thereto along with all other reasonable costs, charges, expenses and legal fees in relation thereto;

9.1.2        The Borrower will submit copies of audited/unaudited financial statements (balance sheet/income statement/cashflow statement as prepared at the end of the financial year) to the Bank and will provide any other relevant financial/information as may be required by the Bank;

9.1.3        the Borrower shall not change its Memorandum of Association and Articles of Association without prior written approval of the Bank which consent shall not be unreasonably withheld;

9.1.4        the Borrower undertakes to pay all debts when they become due;

9.1.5        the Borrower undertakes that it shall not change the governing body without prior written permission from the Bank.


10.1          If:

10.1.1    The Borrower fails to pay any sum due from it hereunder on the due date or on demand, if so payable;

10.1.2    The Borrower fails to observe or perform any of its other obligations under this Agreement or under any undertaking or arrangement entered into in connection herewith and, in the case of a failure capable of remedy, the same is not remedied within fourteen (14) days after The Borrower became aware of the failure, to the Bank’s satisfaction;

10.1.3    any representation, warranty or statement which is made by the Borrower in this Agreement or in connection with this Agreement proves to be incorrect in any material respect;

10.1.4    any provision of this Agreement is or becomes for any reason, invalid or unenforceable or any consent or approval required by the Borrower for the performance of its obligations hereunder is revoked or modified;

10.1.5    the Borrower is adjudicated insolvent or unable to pay its debts;

10.1.6    there is a material, adverse change in the Borrower’s financial position that prevent the Borrower from performing all or any of its obligations under this Agreement;

then or at any time thereafter, the Bank may declare the Facility to be immediately due and payable whereupon it shall become so due and payable, together with accrued interest thereon and any other amounts then payable under this Agreement and proceed to enforce the Security Document, and any other security provided hereunder or in connection herewith.

11.       INDEMNITY

11.1    The Borrower shall fully indemnify the Bank from and against any expense, loss, damage or liability which it may incur as a consequence of the occurrence of any Event of Default or arising out of or in connection with the performance or non-performance by the Borrower of any of its obligation under this Agreement.


12.1     The Bank reserves the right to call back the Facility extended to the Borrower at any time without assigning any reason whatsoever and in that event, the Borrower has to settle all outstanding with the Bank immediately. The Bank also reserves the right to alter or modify the terms of the Facility at the sole discretion of the Bank. The Bank or its officials shall not be held responsible for any loss or losses, if any, incurred there against.


13.1 Time shall be of the essence of this Agreement, but no failure to or delay in exercise by the Bank of any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right or remedy prevent any further or other exercise thereof or the exercise of any other right or remedy. The rights and remedies herein provided are cumulative and not exclusive of any rights or remedies provided by law.

11.2          No provision of this Agreement may be amended or otherwise modified or waived except by an instrument in writing signed by or on behalf of The Borrower and Bank.

11.3       The Borrower shall not be entitled to assign or transfer all or any of its rights, benefits and obligations hereunder except with the approval of Bank, but the Bank may, at any time, assign all or any of its rights, benefits and obligations hereunder.

11.4       Any notice, request or other communication required or permitted to be given or made under this Agreement to Bank or to The Borrower shall be in writing to the addresses stipulated hereunder. Such notice, request or other communication shall be deemed to have been duly given or made where it shall be delivered by hand, air mail, cable or telex to the party to which it is required or permitted to be given or made at the address as mentioned in this agreement before. Any communication or document to be made or delivered to Bank shall be effective only when received by Bank.

11.5       Any dispute arising out of this Agreement shall be settled through Court of Law.





In witness of:






In witness of:




Sl. Security Instrument

Drafted by:

For: “The Lawyers & Jurists”
M.L.Hotel Tower Ltd,208,Shahid Syed Nazrul Islam Sarani,
Bijoy Nagar, Dhaka-1000.