BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Borrowing account for purchase of raw materials
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Borrowing account for working capital against security of stocks
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Working capital loan account against security of stocks in possession of the borrower
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Borrowing account for working capital where the stocks of the borrower are in custody of the bank/lender
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Detailed explanation-1: -Hypothecation means offering an asset as collateral security to the lender. The ownership lies with a lender, and the borrower enjoys the possession. In the case of default by the borrower, the lender can exercise his ownership rights to seize the asset.
Detailed explanation-2: -What Is Hypothecation? Hypothecation occurs when an asset is pledged as collateral to secure a loan. The owner of the asset does not give up title, possession, or ownership rights, such as income generated by the asset. However, the lender can seize the asset if the terms of the agreement are not met.
Detailed explanation-3: -Introduction. Goods financed by banks in India are often hypothecated to the bank as security/ collateral till the loan covering it is repaid by the borrower. Hypothecation is used when a debtor wants to obtain a loan and use a certain property or asset as a security or collateral.
Detailed explanation-4: -Hypothecation is the practice where you pledge an asset (in this case, a car) to a bank when applying for a loan. The bank keeps the car as collateral or security until you pay it off. Your bank technically “holds” your car during your loan’s tenure, though you physically have possession of it.