Lesson No. 8 – Types of Securities

Lien - To hand over a security FD to a bank; who can hold it till bank gets repayment. ( A bank takes a letter of lien and appropriation to adjust loan against it on maturity ; since bankers lien is a general lien and hence banker can adjust other loan accounts).
Assignment- Means transferring the benefits (policy proceeds)in a contract to the bank.
Pledge- It is a charge by which the goods are given in the hands of bank It can be actual possession or by keeping goods in a godown of which keys are with banks or symbolic possession ie holding an endorsed RR/LR/BL/ware house receipt etc.(The ownership with borrower).
Hypothecation - It is creation of charge on goods and movable FA where both possession and ownership lies with borrower ( The borrower holds goods as Trustee of a banker).Hypothecation can be converted to pledge after giving notice. Pledged goods can be sold after proper notice.
Mortgage- It is transfer of interest (ie right in a property) in a specific immovable property to a banker to secure an existing debt ( ie outstanding loan) or a future debt (ie loan to be disbursed).
To encash it as per SARFASI act notice and other procedure be complied .Or a Mortgage decree be obtained from a competent court and then sale be executed.
Transfer of interest in assets- It is to be recorded with issueing authorities and possession be obtained eg NSC/ IVP/KVP with Post Office.
**Charges Defined Under Sections **
- Lien -Indian Contract Act Sec 170 and 171
- Assignments - Transfer of Property act Sec 130
- Pledge- Indian Contract act Sec 172
- Hypothecation - SARFSESI sec 2n
- Mortgage - Defined in Transfer of property act Section 58
- Personal Guarantees - India Contract Act Sec 126.

Shall we close the day's proceedings?
Thank u.
Waman Gokhale