What do you mean by Security?/What do you mean by Primary security?/What do you mean by collateral security?/What are the attributes of a good security?/When a bank call back it’s credit facility?/What do you mean by ‘Document’ & ‘Documentation’?/Write down the steps of documentation?
What do you mean by Security?
Ans. Security means things deposited as a guarantee of an undertaking or loan, to be forfeited in case of default. Also means document as evidence of a loan, certificate of stock, bonds etc. It is also meant to be an insurance against an emergency.
What do you mean by Primary security?
Ans. Primary security is one which deposited by the borrower & provide the main covers for the advance made. Primary security are two types:
i). Personal security
ii). Impersonal security
i). Personal security: Borrower executed/perform promissory note, accepts or endorse bill of exchange, make personal covenants in mortgage deed. These are called personal security.
ii). Impersonal security: When charge created on borrowers tangible assets like pledge, hypothecation, mortgage etc. that is called impersonal security.
What do you mean by collateral security?
Ans. A collateral security is a security belongs to & deposited by the borrower himself or by any third party to secure the advance made. Collateral security may be two types. These are :
i). Direct collateral security &
ii). Indirect collateral security.
What are the attributes of a good security?
Ans. i). Legal Aspects: a). Ascertainment of title
b). Validity of title.
ii). Economic aspects : a). Marketability.
B). Easy ascertainment of value
c). Stability of price
d). Easy storability
e). Durability
f). Transportability
g). Cost of consideration
h). Yield
When a bank call back it’s credit facility?
Ans. i). If the borrower fails to renew the documents sufficiently before the expiry.
ii). If there is a material deterioration in the value of the security.
iii). If the borrower fails to maintain adequate margin with the bank in spite of constant requests.
iv). If the borrower refuses to lodge with the banker additional security to cover the amount withdrawn in excess of the limit.
v). If the borrower is guilty of misconduct or fraud causing serious damage to his credibility.
vi). If there is a change in the policy of the bank, Central bank or Government making necessary recalling the advance.
What do you mean by ‘Document’ & ‘Documentation’?
Ans. Document: A document is a written statements of fact of proof or evidence arising out of particular transaction which on placement may bind the parties there to answerable and liable to the court of law for satisfaction of the charge in question.
Documentation: The execution/completing of document in proper form and according to the requirements of law is known as documentation. Documentation is, therefore necessary for the acknowledgement of debt by the borrower and charging of securities to the Bank by him.
Write down the steps of documentation?
Ans. 1. Obtaining of instruments (Documents). osewr
- Stamping.
- Execution.
- Witness.
- Registration.