Document background
The Subordinated Loan Agreement is a specialized financing document used when a lender provides debt that is contractually subordinated to other senior obligations of the borrower. This document is particularly relevant in the Pakistani banking and financial services sector, where it must comply with State Bank of Pakistan regulations and the Banking Companies Ordinance 1962. It's commonly used for regulatory capital purposes by banks, or in corporate financing structures where existing senior lenders require new debt to be subordinated. The agreement includes detailed provisions on subordination mechanics, regulatory compliance, interest calculations, repayment restrictions, and enforcement limitations. Given the complex regulatory environment in Pakistan, special attention is paid to ensuring compliance with local banking regulations, capital adequacy requirements, and corporate law provisions.
