TYPES OF CHARGES
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Principles and Practices of Banking — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
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.
What type of charge is created when a borrower mortgages immovable property to a bank?
A mortgage is the charge created on immovable property (land and buildings) to secure a loan, and it is governed by the Transfer of Property Act, 1882.
What is the primary feature that distinguishes hypothecation from pledge?
In hypothecation, possession of goods remains with the borrower.
Which section of the Transfer of Property Act defines a mortgage?
Section 58 of the Transfer of Property Act, 1882 defines a mortgage as the transfer of an interest in specific immovable property for the purpose of securing the payment of money advanced or to be advanced.
What is a 'mortgage by anomalous' method in Indian banking?
A mortgage combining features of two or more standard mortgage types.
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