In which of the following charges on movable property does the possession of the goods remain with the borrower?
- A.Pledge
- B.Hypothecation
- C.Lien
- D.Mortgage
Correct answer
Explanation
The correct answer is B, hypothecation. In hypothecation a charge is created on movable property, such as a financed vehicle or the stock in a trader's shop, while the borrower keeps and uses the goods. Because the lender does not hold them, it must first take possession of the asset before it can sell it, which is why a defaulting borrower's car has to be seized, and the SARFAESI Act of 2002 gives a secured creditor that power.
Option A, pledge, is the charge under which the goods are delivered to the lender, as with gold kept in a bank's strong room, and it is governed by the Indian Contract Act of 1872. Option C, lien, is the right of the lender to retain goods or securities already in its hands until its dues are paid. Option D, mortgage, is a charge on immovable property and so does not belong to this group at all.
Read the full article: Loans, Advances and Interest Rates: MCLR to NPA
Practice Questions
View allIn the context of rural credit and micro finance, KCC stands for:
- A.Krishi Credit Card
- B.Kisan Credit Card
- C.Krishi Credit Corporation
- D.Kisan Credit Corporation
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The Kisan Credit Card scheme was introduced in 1998 on the recommendation of the R V Gupta Committee and is worked by commercial banks, regional rural banks and cooperative banks.
Read the full explanation →Which model of self help group is also known as the international model?
- A.CDF model
- B.SEWAA model
- C.SAPAP model
- D.DWCRA model
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The South Asia Poverty Alleviation Programme model is called the international model of self help group formation because it was taken up with the support of the United Nations Development Programme and followed the same design across South Asian countries, beginning in India in the districts of Andhra Pradesh.
Read the full explanation →From which date did banks in India begin pricing new floating rate loans on the marginal cost of funds based lending rate, MCLR?
- A.1 July 2010
- B.1 April 2016
- C.1 October 2019
- D.1 April 2003
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The Reserve Bank introduced the MCLR from that date so that the price of a loan would follow the marginal, that is the latest, cost of raising funds rather than the average cost of old deposits.
Read the full explanation →The base rate system introduced by the Reserve Bank of India in July 2010 replaced which of the following?
- A.Marginal cost of funds based lending rate
- B.Benchmark Prime Lending Rate
- C.External benchmark lending rate
- D.Bank rate
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Under the BPLR system a bank announced a prime rate for its best customers and then lent to many borrowers below it, so the announced rate told a customer very little and the lending book was not transparent.
Read the full explanation →Mortgage of immovable property in India is governed by which of the following Acts?
- A.Indian Contract Act, 1872
- B.Transfer of Property Act, 1882
- C.Negotiable Instruments Act, 1881
- D.Banking Regulation Act, 1949
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Section 58 of that Act defines a mortgage as the transfer of an interest in specific immovable property to secure a loan, and it names six kinds: simple mortgage, mortgage by conditional sale, usufructuary mortgage, English mortgage, mortgage by deposit of title deeds, which is also called an equitable mortgage…
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