1.1.1 The Process of Disbursing a Syndicated Loan

The process in which the loan is disbursed (or the customer avails the loan) under a syndication agreement depends upon many factors. The most important factor is the nature of the requirement of the customer. The other factor is the identification of the participants who would share the load of funding the borrowing.

The customer could choose to avail the loan:

• Either entirely, in one installment, or borrow a fixed installment amount at a desired frequency, over a specified tenor.
• The syndication agreement may provide for different interest application, calculation, and collection methods for each of the installments.
• In addtion, it can provide for revolving or non-revolving commitments while availing the installments.
• The identification of the participants who would share the load of meeting the borrowing requirements depends upon all these factors.
• Accordingly, it is possible, due to the nature of the borrowing requirement,
• That a different set of participants may be identified to share the funding, for each installment of loan principal borrowed.
• However, the same set of participants can also fund each installment in different ratios, if so dictated by the nature of the borrowing requirement.