Legal Question in Banking Law in India

Re: pari passu

Hello.

Good Afternoon.

Pari Passu charge means at an equal rate.

Re: pari passu

equal rate

Re: pari passu

pari passu means equal.

Re: pari passu

Pari passu is a Latin phrase that literally means "with equal step." It is sometimes translated as "part and parcel," "hand-in-hand," "with equal force," or "moving together," and by extension, "fairly," "without partiality.". If one bank has a mortgage of a property,for its loan and another bank also lends with the consent of the former bank, the latter bank also will lend claiming the same rights over the mortgaged property and that is called ceding a pari passu charge.

Re: pari passu

When a property is to be mortgaged to more than one lenders / mortgagees, there can be either charge created in order of time : e.g. First charge for the first mortgagee; 2nd charge for 2nd mortgageee; so on and so forther;

However, when both or all the morgtgagees/lenders, want the same quality of charge, and the parties to the contract agree for such a charge, it is called a "Pari Passu" charge. It may normally be simultaneously created; but may also be created after the first charge is already there.

In some cases, at the time of giving loans, the lenders agree to share the amount of loan which is called consortium financing; in these situations, all the consortium lenders agree for a "pari passu" charge on the property.