Modification of charges

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RItu (Querist)
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25 March 2008 sir would like to know in case of consortium arrangement of working capital limits, do banks exchange pari passu letters every year of renewal,as customary or only if there is a change in the security or increase in limits other than change in interest rates, these letters are exchanged between banks

kindly let me know

R.V.RAO

R.V.RAO (Expert)
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22 April 2008 THERE IS NO SUCH THING AS EVERY YEAR BANKS EXCHANGING PARIPASSU LETTERS.
ONLY IF THERE IS
-A CHANGE IN TERMS OF SECURITY /
-CHANGE IN SHARING RATIO OF SECURITY BY CONSORTIUM MEMBERS /
-CHANGE IN TERMS OF THE BORROWING LIMITS /
-INCREASE OR DECREASE OF LIMITS/
- ANY DEFICIENCY POINTED OUT IN BANK AUDITS REGARDING SECURITY CREATION
-ANY SPECIAL COMPLIANCE REQUIREMENTS DUE TO CHANGE IN APPLICABLE STATUTES
THEN CONSORTIUM BANKS MAY EXCHANGE INTERSE LETTERS/PARIPASSU LETTERS.
R.V.RAO