Agreement to Mortgage in Letter Form

(1) To,
         The General Manager
         Bank of
Sir,
I am a young entrepreneur and propose to start a small scale industry for manufacturing the product viz:
1. My qualifications are as follows:-
2. I have acquired an expertise or know-how of the process of manufacturing the said   product which has a good demand from the following reputed concerns
3. 1 have acquired a plot of land at …………Industrial Estate on a long lease with built up shed thereon  and have installed some machinery 
4. It is however necessary for the Industry to import the following machinery viz.
5. The said machinery will cost atleast Rs…………..including all expenses. As I have no funds I beg to apply to you for a term loan of Rs………….for the repayment of which I offer my said property of land with shed and fixed machinery as security.
6. I also require a loan for working Capital to the extent of Rs……..against the security of the raw material and finished products 
7. Please therefore consider my application and arrange to sanction the loan as early as possible.
8. If any further information is required I will be ready to supply the same as I can.
Yours faithfully
(2) To,
Shri…………………..
Reference   your application dated………………for term loan of Rs………..and working capital loan for Rs…………….
Dear Sir,
With reference to your above mentioned application, I have to inform you that the Board of Directors of the Bank has sanctioned to grant you a term loan of Rs……………and a cash credit loan of Rs……………..for working capital on the following terms
1)The term loan of Rs	will be advanced by opening a letter of credit with your importers/Bankers…………and will be paid by paying the invoice value for clearing the machinery to be imported to the extent of the said amount. 
2) If the term loan amount is short of the import value and all incidental expenses by way of custom and import duties, port trust charges and other charges the deficit will be paid by you from your pocket
3) You will execute a deed of English mortgage in favour of the Bank simultaneously with the Bank offering its letter of credit, in respect of your property namely the plot of land at……………..with the structure thereon and fixed machinery. 
4) The deed will contain such powers and provisions as will be required by the Bank's legal adviser. 
5) All the costs of and incidental to such deed including stamp duty and registration charges will be payable by you. 
6) The mortgage will be a first charge on the property. 
7) The cash credit facility to the extent of Rs……………..is also sanctioned against the security of hypothecation of all the movable property in your factory and particularly the raw goods and finished and unfinished goods lying in the factory for the time being and from time to time. 
8) You will execute the deed of hypothecation in terms of the Bank's standard form with such additions and alterations as the Bank may think necessary.
9) The term loan will carry interest at the rate of Rs……..with a provision that the arrears of interest for 3 months or more will carry interest at the said rate by way of compound interest. 
10) The cash credit account will be operated on the Bank's usual terms. 
11)The term loan will be repayable within a period of……….years from the date of advance and the cash credit facility will be available so long as the Bank does not propose to discontinue. 
12) You will make out marketable title to your property to be mortgaged to the satisfaction of our legal adviser. 
13) If the title is not acceptable to our legal advisor the Bank will not be bound to advance the loan.
14) The costs of the documents as aforementioned will be deductible from the amount of loan unless you arrange to pay it separately. 
15) You will execute in favour of the Bank such other papers and documents as may be found necessary to secure the said loan.
Please confirm	                                                                                          yours faithfully
General Manager
Bank of………………………………….

To,
The General Manager
Bank of
Sir,
Reference: My application for term loan dated………
I am in receipt of your letter dated……………and I am thankful for the same. I accept the terms mentioned in your letter.
Yours faithfully