Types of Collaterals
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 collateral security in the context of bank lending?
Collateral security is an asset pledged by a borrower to a lender as additional security for a loan, which the lender can seize and sell if the borrower defaults.
What is a simple mortgage and how does it differ from other mortgages?
Mortgagor binds himself to repay and agrees to sell property if default occurs.
What is the difference between primary security and collateral security?
Primary security is the asset directly created or purchased from the loan proceeds, while collateral security is any additional asset offered by the borrower or a third party to further secure the loan.
What is a conditional sale mortgage under the Transfer of Property Act?
Mortgagor ostensibly sells property with condition to repurchase on repayment.
What are the main types of collateral accepted by banks in India?
Banks in India accept collaterals such as immovable property, movable assets, financial securities, life insurance policies, fixed deposits, gold and jewellery, and book debts/receivables.
What is an anomalous mortgage under Indian law?
A mortgage that does not fall under any other defined type of mortgage.
What is a mortgage as a form of collateral?
A mortgage is the transfer of an interest in immovable property as security for repayment of a loan, created under the Transfer of Property Act, 1882.
What is a reverse mortgage and who can avail it?
Senior citizens can mortgage home to receive periodic payments from bank.
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