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Types Of Security In Banking

Do you have thoughts for taking a loan? Need money to do things or start up a new project. Taking loans not so bad but it is a suitable solution for a lot of people but you must be aware of the types of Security on banking because the bank must ensure that you pay back what you borrowed.

Types Of Security In Banking

-Personal Security

This typically means the guarantee given by the borrower or by a third party in the lead of pledging a tangible asset, for example, you can bring your friend to ensure you, but rarely banks grant a loan against such security unless the borrower has a special and long relationship with the bank.

 -Nonpersonal security

Without a third party or without receiving any client himself or any person own, if the bank can receive the immovable & chattel assets as security is considered as non-personal security.

There are types of non-personal security

– Lien
– Pledge
– Mortgage
– Hypothecation

Lein is legally enforceable claim on the property of another as a result of a debt or obligation. It may be voluntary, such as a mortgage, or involuntary, such as a tax lien. It may be general, such as a judgment lien on all property within a county, or specific.

Pledge is the possession of assets that go to the bank or loan provider, but the owner is to the borrower. After payment, the bank transfers the possession of assets to the borrower once again. When a customer takes a loan against jewels he pledges the jewel to the bank.

Mortgage it is an interest in property created as for a loan or payment of debt and terminated on payment of the loan or debt. A mortgage is a contract that permits a loan provider partially or fully to foreclose that when a borrower is unable to pay the loan amount.

Hypothecation is pledged to secure an obligation without delivery of title or possession. t last, we can say that in the modern banking sectors a great change has occurred in the categories of categories of the mortgage.


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