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CCP604 (B)
CCP604 (B)
ANDHRA PRADESH
Name :Sreenivasa Rao B.
Designation :Lecturer in CCP
Branch :Commercial and Computer Practice
Institute :S.U.V.R&S.R GPW,Ethamukkala
Semester :VI SEMESTER
Subject name :Banking II
Subject code :CCP 604 (B)
Major topic :Loans and Advances – Short Term
& Long Term
Duration :50 minutes
Sub topic :Various Modes of Creating Charge.
Teaching aids :PPT
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Objectives :
On completion of this period you would be
able to
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Recap
We have discussed
The various types of creating charge an assets
Mortgage- meaning
Mortgage-definition
Essential feature of mortgage
Forms of mortgage
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Hypothecation
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Hypothecation…
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Hypothecation – Definition
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Features
[a] No Transfer of Possession: Under hypothecation,
the physical possession of goods always remains
with the the borrower. Actually, the banker gets
only the constructive possession. Borrower
executes a document called Deed of
Hypothecation.
court.
Drawbacks
[a] Least Control Over the Security: The banker is
having the least control over the security. Both
ownership and possession of the hypothecated
goods remain with the borrower. So, he can very
easily indulge in fraudulent activities.
items.
[c] Double Financing: The borrower may hypothecate
the same stocks of goods with different banks and
get different loans, since, there is no necessity of
physically transferring the goods to the banker.
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Precautions
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Inspection: The banker must pay frequent visits to
the factory/godown and check the stocks and the
books of account. If there is any discrepancy, the
borrower must be put into task.
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Insurance of Goods: The banker should insist upon
the borrower to insure the goods against all risks.
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Summary
In hypothecation, the goods remain in the
possession of the borrower and are equitably
charged to the lender under documents signed
by the borrower.
Hypothecation facility granted only to first class
customers.
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Summary…
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Quiz
a) Lien
b) Pledge
c) Mortgage
d) Hypothecation
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Quiz
Hypothecation
Legal mortgage
Pledge
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FREQUENTLY ASKED QUESTIONS
1. Define Hypothecation.
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