Document background
The Incidental Credit Agreement serves as a crucial legal instrument in Indian business transactions where credit facilities are provided as a secondary aspect of the primary business relationship. This document becomes necessary when businesses need to establish clear terms for extending or receiving credit that is incidental to their main commercial dealings. The agreement must comply with Indian contract law, banking regulations, and RBI guidelines, particularly addressing aspects such as interest rate calculations, security requirements, and repayment terms. It's commonly used in supplier-customer relationships, service provider arrangements, or business-to-business transactions where occasional credit needs arise. The agreement provides protection for both the credit provider and the borrower by clearly defining the credit terms, conditions, default scenarios, and remedies available under Indian law.
