Most promoters assume the Reserve Bank of India sets out exactly how a syndicated loan should be arranged. It does not. RBI withdrew its formal rules on consortium, multiple banking and syndicate arrangements back in 1996. What exists today is market practice, not a prescribed procedure.
That is the most important thing to say before walking through any timeline.
The other thing worth saying upfront: Loan syndication is not one product. It covers working capital loans, term loans for business expansion, project finance for large infrastructure or manufacturing projects, structured facilities like lease rental discounting, and debt securities like Non-Convertible Debentures. The steps below apply broadly across most of these. But some steps, especially around security, legal filings and account structures, matter more for certain types of financing than others. Where that is the case, this article says so.
Step 1: Define what you actually need
This sounds obvious. It rarely is done well.
Before approaching anyone, get clear on the basics: how much money you need, over what period, for what specific purpose, and what assets or cash flows you can offer as security. Also look at your existing loans. If other lenders already have a claim on your key assets, or if your existing loan agreements restrict you from taking on more debt without their permission, that shapes everything that follows.
The type of debt you need also matters here. A working capital loan is structured very differently from a five-year project loan or a debenture issue. Knowing which category you are in helps you approach the right lenders with the right ask.
Step 2: Appoint an arranger
An arranger, also called a debt advisor, is the person or firm that runs the syndication process on your behalf. They approach lenders, prepare the documents, manage negotiations and drive the deal to close.
The appointment is formalised through a mandate letter, which sets out what the arranger will do, what they will charge, and how long the engagement runs.
One common mistake: continuing to approach lenders on your own, informally, after appointing an arranger. The same file landing on a bank’s desk from two different sources creates confusion, signals disorganisation and weakens your negotiating position before a single term has been discussed.
Step 3: Build the credit case
This is where the actual preparation work happens. Your financials need to be analysed properly, not just submitted. Your arranger will typically build a financial model showing how the business performs, how the debt will be repaid, and what happens to repayment capacity if revenue or margins come under pressure.
Bureau checks also happen at this stage. Every director and promoter’s credit history is reviewed. A single missed EMI or an unresolved dispute entry on any director’s record can complicate a lender’s decision, even if the business itself is financially strong. It is worth knowing your own record before a lender finds it for you.
A good arranger does not just gather data. They read it the way a lender will, find the weak points, and build the explanation for each one before the question is asked.
Step 4: Prepare the Information Memorandum
The Information Memorandum, or IM, is the core document that goes to prospective lenders. It covers the company background, the promoter and management team, the industry the business operates in, the historical financial performance, financial projections for the loan period, an analysis of whether the business can comfortably repay (called DSCR, or Debt Service Coverage Ratio), the proposed security, and a discussion of key risks along with what mitigates them.
It is not a short document, and it is not a brochure. A well-prepared IM tells a complete story that allows a credit officer to do their job without coming back with ten follow-up requests.
Preparing a credible IM is often where an arranger adds the most immediate value. Most borrowers submit financials and a brief presentation. Lenders at the appraisal stage need considerably more.
Step 5: Identify and shortlist lenders
Not every lender is right for every deal. Banks have internal limits on how much they can lend to any single borrower, or to any single industry. For example, some banks are close to their internal limits for real estate lending and will not take new real estate files regardless of quality. NBFCs and private credit funds have different constraints and often different appetites.
The regulatory side: under RBI’s Large Exposures Framework, a bank cannot lend more than 20 percent of its eligible capital base to any single borrower (this can go up to 25 percent in exceptional cases with board approval). For groups of connected companies, the combined limit is 25 percent. A bank’s exposure to any single NBFC is capped at 15 percent.
A well-connected arranger knows which lenders are active in which sectors, which ones have appetite at the current time, and which ones to avoid. This knowledge is not publicly available and changes constantly.
Step 6: Approach lenders and collect indicative terms
Lenders first sign a confidentiality agreement before receiving the IM. After reviewing it, they may ask questions, request a site visit or a management meeting, and then give an indicative response.
This might come as an indicative term sheet, which is a document that sets out the broad terms a lender is willing to consider. It is important to understand that a term sheet is not a commitment. It is not a sanction. It is nonbinding and subject to the lender’s full credit approval process. Do not make financial commitments based on a term sheet alone.
A sanction letter comes later and is the lender’s formal, approved offer.
Step 7: Due diligence, appraisal and sanction
Each lender now runs their own internal process. This includes reviewing financials, inspecting the business or project site, valuing any proposed security, and putting the proposal through their credit committee. For project finance deals in particular, lenders often commission a Technical Evaluation and Viability (TEV) study or appoint a Lender’s Independent Engineer (LIE) to assess the project.
No lender can skip this step or delegate it. The credit decision belongs to the lender.
Step 8: Negotiate final terms and allocate among lenders
Different lenders often sanction slightly different terms for the same deal. One bank may sanction a lower interest rate but want more security. An NBFC may offer more flexibility on the repayment schedule but at a higher cost. Someone has to compare all of these, reconcile the differences, and put together a final package that works.
In a typical syndication, this is the arranger’s role. The borrower is rarely in a position to negotiate five different sets of terms simultaneously and bring them to a coherent outcome.
This is where a good arranger earns their fee, running what is effectively a competitive process among lenders and using the interest from multiple parties to get better terms from each one.
Step 9: Documentation
Once terms are agreed, the legal documents are prepared. For a syndicated or consortium deal, this typically includes a common loan agreement, hypothecation deeds over movable assets, mortgage documents for immovable property, personal and corporate guarantees, a security trustee agreement (where a single trustee holds the security on behalf of all lenders), an intercreditor agreement (which sets out the rules between lenders), and any account-related documents.
A note on three terms that often get used interchangeably but mean different things:
• An escrow account is an account held by a third party into which specific receipts are deposited, and released under agreed conditions.
• A Trust and Retention Account (TRA) is more structured. All project or business revenues flow into it, and money is applied in a set order: statutory dues first, then operating costs, then interest, then principal, then debt reserves, and only then any surplus to the borrower. TRA structures are more common in project finance and infrastructure lending.
• A Debt Service Reserve Account (DSRA) is a funded buffer, usually equal to a few months of debt service, that lenders require as a cushion. The exact size is negotiated as part of the deal.
Whether you need one, two or all three of these depends on your deal type.
Step 10: Creating and formalising security
Security creation is one of the most time-consuming parts of any debt transaction. It is also where deals slip most often.
After the loan documents are signed, the lender’s security interests need to be formally established. This involves several things, depending on the type of security involved.
For loans secured against property, a mortgage is created, For movable assets like plant, machinery or receivables, a hypothecation charge is created. For shares, a pledge is registered with the relevant depository.
Charges created on company assets must be reported to the Registrar of Companies within a specified period, and this requirement sits with the company, not the lender. Missing this window has serious legal consequences for the enforceability of the security.
In addition, if other lenders already hold security over the same assets, they will need to issue a No Objection Certificate (NOC) or agree to share the security on a pari passu basis, meaning all lenders rank equally. In a consortium, this requires the lead bank’s agreement and often the agreement of all member banks. Getting NOCs from public sector banks in particular can take several weeks and sometimes requires the existing loan to be partially paid down first.
Step 11: Conditions precedent and first disbursement
Before any money is released, the borrower must satisfy a checklist of conditions that the lenders have specified. These are called Conditions Precedent (CPs). They typically include executed and stamped documents, board resolutions and shareholder approvals, legal opinions from counsel, property valuations, insurance policies with the lender noted as a beneficiary, accounts opened at the required banks, promoter’s own contribution brought in and evidenced, NOCs from existing lenders, and all fees paid.
This is the stage where an arranger’s project management role matters most. Every condition needs to be tracked, chased and closed, often across multiple lenders, their legal teams, government registries and the borrower’s own team. Delays here are common and are almost entirely avoidable with organised oversight.
Step 12: After the money arrives
The deal is not over once the funds arrive.
Conditions Subsequent (CSs) are tasks that were not completed before disbursement but must be completed within an agreed window. For example, charge registration may be a CS if the filing timeline runs from the date of document execution rather than the date of disbursement.
Beyond that, the borrower has ongoing reporting obligations: submitting periodic financial statements, stock and debtor statements for working capital facilities, insurance renewal confirmations, and annual covenant compliance certificates that confirm the business is still meeting the financial ratios set in the loan agreement.
There is no single answer, and anyone who gives you one precise number without context should be pressed for their assumptions.
Indian advisory firms and debt platforms point to roughly three months from mandate to first disbursement for a well-prepared, secured, multi-lender deal. That is a reasonable working assumption for planning purposes. Simple deals or those where the borrower has clean documentation and existing lender relationships can move faster. Complex project finance deals with title issues or multiple states of security, or transactions requiring existing lender NOCs can run considerably longer.
The variables that matter most: how complete and clean your financial documentation is on day one, how many lenders are involved, what condition your existing charge and security position is in, and whether your deal requires going through your shareholders for a formal approval.
Sanction is rarely where the time goes. Steps 9 to 11 are where most transactions slow down, and where the difference between organized execution and ad hoc follow-up becomes most visible.
How Leverest can help
Leverest acts as a debt advisor, not a lender. When you bring us a financing requirement, we draw on our knowledge of the debt market and relationships with more than 50 lenders and financial institutions to streamline the process and identify the right lender for your needs. We build a realistic case, approach suitable lenders, and negotiate terms that reflect what is genuinely achievable.
We typically present two or three deal options, each from a different lender, with varying rates, tenors, and structures. You can compare the alternatives, ask questions, and choose the option that best fits your requirements. The decision remains yours throughout.