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TYPES OF CHARGES
What is a 'charge' in the context of bank lending?
A charge is a security interest created by a borrower in favour of the lender over assets, giving the lender the right to realise those assets in case of default.
What is the nature of a pledge as a type of charge in banking?
Pledgee takes possession of movable goods as security.
What is the difference between a pledge and a hypothecation?
In a pledge, possession of goods is transferred to the lender, whereas in hypothecation, possession remains with the borrower while the charge is created in favour of the lender.
Under which Act are the provisions for pledge specifically governed in India?
Pledge is governed by Sections 172-179 of the Indian Contract Act, 1872.
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