How banking and finance lawyers use Justis AI

The problem

The credit note says the facility is secured by a mortgage, a hypothecation, a share pledge and two guarantees. Whether it is depends on the paper: a charge filed with the Registrar within the time the Companies Act allows, the security interest registered with CERSAI, the pledge recorded with the depository, the mortgage deed stamped under the state stamp Act, the board resolution behind the corporate guarantee.

A single defect is found at the worst moment, when the borrower's lawyer or the resolution professional reads the file.

How Justis handles it

Upload the loan file and tabular review asks the same questions of every document: what security it creates, over what, the date of creation, whether the charge and the CERSAI filing were made in time, and whether the stamp duty and authorisations are on file. Each cell cites the page.

Justis lists every gap with what would cure it, if anything still can, and exports the grid to Excel for the credit team.

The problem

The borrower's counsel returns the facility agreement with two hundred comments. Some are fine, some quietly narrow the events of default, and a few move the bank off positions its credit policy does not allow, such as cross-default thresholds, the material adverse change clause, or penal charges that the RBI's directions no longer let a bank add to the interest rate.

The term sheet, the sanction letter and the draft each say something slightly different, and the credit team wants to know which differences matter by the end of the day.

How Justis handles it

Your bank's positions go into a playbook once. Justis reads the marked-up draft against the playbook and the sanction letter, and sorts every comment into accept, counter or reject, with the reason and the fallback drafted.

It lists where the draft departs from the sanction terms, checks the penal charge and interest reset clauses against the RBI directions in force, and returns the counter-draft as tracked changes in Word.

The problem

The borrower is heading for insolvency and the recovery will come from the guarantors. A guarantor's liability is co-extensive with the principal debtor's under section 128 of the Contract Act, but it can be discharged by a variation of the contract made without the guarantor's consent, and a corporate guarantee given without the right resolution is open to challenge.

The file has three restructurings, two top-ups and a change of promoter, and nobody has checked which of them each guarantor signed.

How Justis handles it

Justis reads every guarantee and every later amendment, and builds a table of who consented to what. It flags variations a guarantor did not sign, checks whether each guarantee is continuing, and tests the corporate guarantees against sections 185 and 186 of the Companies Act and the resolutions on file.

It sets out the route against each guarantor, including an application against a personal guarantor to a corporate debtor under Part III of the IBC, and drafts the invocation notices for you to send.

The problem

SARFAESI is fast only when every step is right. The demand notice under section 13(2) must go to the borrower and every guarantor, state the amount and the secured assets, and give sixty days. A representation must be answered within fifteen days under section 13(3A). A slip at any step is the first ground in the borrower's application to the Debts Recovery Tribunal.

The branch sends the file with the notice already issued and asks for possession next week.

How Justis handles it

Justis reads the notice, the proof of service, any representation and the bank's reply, and checks each step against SARFAESI and the Security Interest (Enforcement) Rules 2002, with the date each was due and the date it happened.

It says whether the bank can take possession under section 13(4) now, drafts the possession notice and the section 14 application if the borrower resists, and sets out the sale timetable.

The problem

The bank wants to start insolvency. The default must be at least ₹1 crore, the petition must be within three years of default unless the debt has been acknowledged, and the record of default and the financial contracts have to be in order. Limitation is where most contested petitions are argued.

The acknowledgments are scattered across balance sheets, restructuring letters and one-time settlement proposals, some signed and some not.

How Justis handles it

Justis reads the account statement, the loan documents, the balance sheets and the correspondence, fixes the date of default, and lists every document that may acknowledge the debt under section 18 of the Limitation Act, with who signed it and when.

It computes the limitation with each acknowledgment shown, checks the record of default from the information utility, and drafts the petition in Form 1 with its annexures and the list of dates.

The problem

Where SARFAESI does not fit, such as unsecured exposure or a shortfall after sale, the bank files an original application under the Recovery of Debts and Bankruptcy Act for a debt of ₹20 lakh or more. The application has to prove the debt from the documents, account for every credit and the interest, and pray for the right relief against each defendant.

The statement of account runs to eight hundred lines and the interest was reset four times.

How Justis handles it

Justis reads the loan documents and the statement of account, reconciles the claim, and shows the principal, interest and charges separately with the rate that applied in each period. It flags entries the defendants will dispute, such as charges not provided for in the agreement.

It drafts the application with the list of dates, the documents relied on and the prayer against each defendant, and exports the reconciliation to Excel.

The problem

A customer complains to the RBI Ombudsman under the Integrated Ombudsman Scheme 2021 about a disputed debit, a delayed release of title deeds or a charge they say was never disclosed. The Ombudsman decides largely on the bank's reply and the documents it furnishes, and can award compensation of up to ₹20 lakh for consequential loss.

The branch's file is a string of emails and a call log, and the reply is due before anyone has read the account opening form.

How Justis handles it

Justis reads the complaint, the customer's documents and the branch file, sets each grievance against what the record shows, and checks the bank's conduct against the RBI directions that apply, such as the timeline for returning property documents after closure.

It says where the bank is exposed and where it is not, and drafts the reply with the documents to furnish, for the nodal officer to review and submit.