Home - Loans & Advances - Loan FAQ - What is Collateral Security ?

What is Collateral Security ?

Collateral Security – This is generally defined as additional security borrower offers a lender to secure a loan. Banks may take some additional securities which are called collateral securities.

Collateral could be in the form of guarantee from one or two persons, assignment of life insurance policies, lien over shares, and units or other securities or mortgage of immovable property.

These additional securities are taken so that in case a loan is not paid back, recourse may be taken to such securities instead of depending upon the primary security alone.

Get Daily Updates On Banking, Enter your email address:

Discuss Your Query :

x

Check Also

mclr calculation

Basic Details of Marginal Cost of Funds based Lending Rate (MCLR) By RBI

Marginal Cost of Funds based Lending Rate (MCLR) is a new lending rate introduce by ...