Question: What is Security?
Answer:
Security means things deposited as a guarantee of
undertaking for loan to be forfeited in case of default
Question: What is Charges?
Answer:
Charges means taking the security lawfully so that
it can be encashed/sold for the adjustment of bank dues.
Question: What are
Classification of Charges?
Answer:
Fixed Charge
A
charge is said to be fixed if it is made specially to cover definite and
ascertained assets of permanents nature or assets capable of being ascertained,
e.g. Charge on land and building or Heavy Machinery .
Floating Charge:
It is a charge on property which is constantly
changing , e.g stock, other assets.
The other classification of
charge are:
Pari- Passu Charge
Pari-passu charge is created in favor of several
creditors , with the condition that they have equal priority.
Second Charge:
A. A creditor holding a second
charge by of mortgage, is entitled to the proceeds after the first charge is
met. He must inform the prior mortgage of his charge because the first
mortgagee can not part with the proceeds or title of the property if he has
notice of the second charge
Question: What are
Common Methods of charging securities?
Answer:
Charging
of securities means making it available as a cover for an advance.
The
common methods of Charging of securities are
q Pledge
q Hypothecation
q Lien
q Assignment
q Set off
q Mortgage
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