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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
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CA R SEETHARAMAN

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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.
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