CAIIB · BRBL

LAW RELATING TO SECURITIES AND MODES OF CHARGE II

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Banking Regulations and Business Laws — CAIIB.

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What is a pledge in the context of banking security?

A pledge is the bailment of goods as security for payment of a debt or performance of a promise. The pledgor transfers possession of goods to the pledgee (bank) while retaining ownership.

What is the meaning of 'charge' in the context of secured lending?

Security interest created over borrower's property in favor of lender.

What is the key difference between a pledge and a hypothecation?

In a pledge, physical possession of goods is transferred to the creditor (bank), whereas in hypothecation, the borrower retains possession and the charge is created without transfer of possession.

What is a simple mortgage under the Transfer of Property Act?

Borrower binds himself personally without delivering possession to mortgagee.

Under which section of the Indian Contract Act is pledge defined?

Pledge is defined under Section 172 of the Indian Contract Act, 1872. It covers the bailment of goods as security for a debt or promise.

What is a usufructuary mortgage as defined in Indian law?

Mortgagor delivers possession; mortgagee receives rents/profits in lieu of interest.

What rights does a pledgee (bank) have in case of default by the pledgor?

Under Section 176 of the Indian Contract Act, the pledgee may either sue the pledgor for the debt or sell the pledged goods after giving reasonable notice of the sale to the pledgor.

What is an English mortgage under the Transfer of Property Act, 1882?

Mortgagor transfers property absolutely with condition to reconvey on repayment.

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