Explanation
This query is : Resolved
24 December 2014
please kindly explain me what is pledge,hypothication and collateral security.
2.what is difference between normal security and collateral security in bank loans
2.what is difference between normal security and collateral security in bank loans
CA R SEETHARAMAN
(Expert)
24 December 2014
Pledge - Gold is pledged(given to the bank kept by bank in safe) with the bank to get loan.
Hypothecation- Stock of raw material Vehicles etc.,(movable assets) with the possession of the borrower.
Collateral security- A form of secondary protection sometimes required by a bank and intended to guarantee a borrower's performance on a debt obligation. The primary security on a substantial business loan is typically the thing that is being financed, such as a factory, company car or shipment, but secondary or collateral security might also be requested by a bank to help assure that the loan will be repaid.
Hypothecation- Stock of raw material Vehicles etc.,(movable assets) with the possession of the borrower.
Collateral security- A form of secondary protection sometimes required by a bank and intended to guarantee a borrower's performance on a debt obligation. The primary security on a substantial business loan is typically the thing that is being financed, such as a factory, company car or shipment, but secondary or collateral security might also be requested by a bank to help assure that the loan will be repaid.
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