5 Questions
What is the definition of a charge in the context of lending and borrowing?
A charge means creating a right over tangible asset offered by borrower/debtor to the lender/creditor. It allows the lender to safeguard their interest by having certain rights over the tangible security provided by the borrower.
What are the different modes/kinds/types of creating charges over securities?
The different modes/kinds/types of creating charges over securities are Lien, Pledge, Hypothecation, Mortgage, and Assignment.
What is the difference between Pledge and Hypothecation in creating charges over securities?
Pledge involves the delivery of possession of the security to the lender, while in hypothecation, the possession of the security remains with the borrower.
How does creating a charge over securities benefit the lender in the context of loan repayment?
Creating a charge over securities provides the lender with certain rights over tangible security, allowing them to safeguard their interests and have the option to sell or transfer the security in the event of borrower default or non-payment of the loan.
Explain the concept of Lien and its significance in lending and borrowing.
Lien is a kind of charge created over tangible security and is an important right of the banker. It refers to the creditor/lender's right to retain possession of the security until the debt is repaid.
Test your knowledge of creating charges with this quiz. Learn about the concept of charges and how lenders create rights over tangible assets offered by borrowers. Explore the rights and implications of charges in lending and borrowing transactions.
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