The mandate and power attorney are the rights cast upon a third person to act on behalf of the principal person/s. The rights of mandate and power of attorney holders are very similar in the operation of bank accounts but they are issued for different reasons and purposes. A mandate, is a simple letter of authority,…
Following the ordinance empowering RBI to lay down the process of initiating steps under the Insolvency and Bankruptcy Code (IBC), an Internal Advisory Committee (IAC) is set up by RBI to oversee the specific steps that are initiated by bankers for resolution of a bad debt. In its first meeting on June 12, 2017, the…
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…
Basically, lien and pledge are forms of the right to retain goods for the same purpose i.e. both are security interest options for payment of a debt. Though they look identical; there are certain differences which this article identifies herein. Lien: Lien is akin to bailment. It is the right to retain goods or securities…
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 article explains the relationship between the bank and the customer like creditor and the debtor, Lessor and the Lessee, Trustee and beneficiary, bailor and bailee, Principal and the agent, assigner and assignee etc. according to the type of service rendered by the bank.] Basically, the relationship between banker and customer is contractual in nature.…
Latest: A few sections relating to registration of security interest by secured and other creditors, the effect of registration of transactions, right of enforcement of securities, and priority to secured creditors were not notified in the said amendment. In view of the foregoing Section 17 to Section 19 of the 2016 Act have been notified…
(This post narrates the background of introducing the ‘bankruptcy law’ and in what way the new law is likely flags the problem loans and protects the interest of lenders.) The ‘Insolvency and Bankruptcy Code, 2016’ bill will be shortly enacted as an ‘ACT’ which will be dealing with resolutions of insolvency and bankruptcy. The fundamental…
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…
Prime security is an asset acquired by a borrower under a loan and it is the same asset that is offered to the lender as a security for the financed amount. The collateral security is one where the lender asks the borrower to provide extra security in addition to the prime security. The situation of…