When banks lend money, they need assurance that the loan will be repaid. This assurance often comes in the form of securities—assets pledged by the borrower that the bank can claim if repayment fails. The law relating to securities and modes of charge provides the legal framework for creating, protecting, and enforcing these rights. For…
A mortgage-backed security (MBS) is a bond type security in which the collateral is provided by a pool of mortgages. For example, A borrows money from Bank ‘B’ mortgaging his house to Bank ‘B’. The Bank ‘B’ sells the mortgage to a company ‘C’ (which may be a government agency or investment bank or private…
The Negotiable Instruments Act, 1881 provides a robust legal framework that safeguards both banks and customers during transactions involving cheques, bills of exchange, and promissory notes. Its provisions ensure trust, reliability, and legal recourse in case of disputes, making it a cornerstone of the Indian banking system. Purpose of the Act The primary intent of…
A company upon payment or satisfaction in full of any charge registered under Chapter VI of the Companies Act 2013 shall give intimation of satisfaction to the Registrar of Companies. The procedure for applying for the certificate of satisfaction of charges registered under the companies act is as under. Mandatory Attachment: Letter of the charge…
Any alteration in the original state of a cheque such as date, amount, payee’s name, changing the word ‘order’ to bearer appearing after payee’s name or in endorsement is called material alteration. All material alteration must have drawer’s approval with his full signature (not initials) where the alterations are made. One of the mandatory features of…
What is a negative lien? Let us first understand what is a negative lien. Actually, there is no legal definition of the term ‘negative lien’ in any of the Indian legislative enactments. However, as it is understood in the normal course of business, it is merely a negative covenant which restricts a person from creating…
The Section 2(16) of the Companies Act 2013 defines ‘Charge’ as “an interest or lien created on the property or assets of a company or any of its undertaking or both as security and includes mortgage”. Thus, ‘charge’ can be described as lender’s right to recover his dues by disposing-off the specified assets of the…
Charge creation means the establishment of the lender’s right over specified assets of the borrower in order to recover principle and interest in default from the borrower. The charge can be created against the same assets by more than one lender. The lender in whose favour charge is first created is called the holder of…
A Charge means an interest or lien created on the property and assets of the company or any of its undertakings or both as security and includes a mortgage. When a charge created on the property and assets of a company is registered by ROC, it is a notice of such charge to the public…
CERSAI (Central Registry of Securitisation Asset Reconstruction and Security Interest) registration is mandatory for all types of security interests created on assets, including mortgages, securitization, and asset reconstruction. This includes loans secured by properties or other assets. The registration must be done by the lender within 30 days of creating the security interest.Section 17 to…
