Negotiable Instrument Fundamentals A negotiable instrument is a written and signed document that promises or orders payment of a specific sum of money, either on demand or at a future date, to a designated person or to the bearer. Examples include cheques, bills of exchange, and promissory notes. These instruments are transferable, allowing for change…
The lender’s right to the term “Hypothecation of assets” is not defined anywhere in the statute. Some courts have even compared hypothecation to the mortgage of movables. Hypothecation of assets is defined in SARFAESI ordinance 2002 as under; “a charge in or upon any movable property, existing or future, created by a borrower in favour…
(This post explains the essence of Mortgage of properties and several forms of mortgage of immovable properties in India viz. Equitable Mortgage, Simple Mortgage, English mortgage, Mortgage by conditional Sale, Usufructuary Mortgage, and Anomalous Mortgage which are major types of mortgage systems currently existent in India.) The essence of Mortgage of properties: The transfer of…
The article explains various types of charges created by banks to establish their rights over the specified security when the borrower defaults. The charge creation means establishing the lender’s right to recover from the specified assets of the borrower, in case the recovery is difficult in the normal course. The mode of bank charge on…
Charge creation means the establishment of the lender’s right over specified assets of the borrower in order to recover principal 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…
Pari-passu is a Latin phrase used in contract law that means “equal footing”. Thus pari passu charge means, having equivalent charge/ rights or say charge-holders have equal rights over the asset on which pari-passu charge is created. Most of the large borrowers are financed by multiple banks in a consortium or under a Joint Lending…
The Fixed charge is a charge on a defined property offered to the lender as security which should be clearly identifiable. During the existence of fixed charge, the borrower cannot change either the nature/identity of the property or otherwise dispose off the property. The securities commonly covered under fixed charge are a mortgage of immovable properties…
Yes, lender bank or Financial Institution (FI) can also file application form for registration of charge with the Registrar of Companies. However, it is the responsibility of the company to register the each charge against its assets. If the borrower company fails to file form for registration of charge with ROC, the lender bank or…
The Payment and Settlement Systems (PSS) Act, 2007 is an Indian law enacted to regulate and supervise payment systems in the country. It designates the **Reserve Bank of India (RBI)** as the primary regulatory authority and provides the legal framework for operating payment systems. The Act ensures smooth functioning, settlement finality, and mandatory authorization for…
The Payment and Settlement Systems (PSS) Act, 2007 empowers the Reserve Bank of India (RBI) to regulate and supervise payment and settlement systems in India. To exercise these powers, the RBI operates through its designated body, the Payments Regulatory Board (PRB). These powers enable the RBI to authorize operators, prescribe standards, conduct inspections, impose penalties,…
