Method of Charge Creation on Asset||Lien||Mortgage ||Pledge||Hypothecation|| Assignment||Set Off|| - YouTube

Dear Viewers, Greetings!

Today We will discuss On "Method of Charge Creation on assets".

When a Bank gives a loan, it takes a lot of securities against the loan

How are the securities? E.g. Land, building.

Then there are inventory, work in progress, finished goods, machinery as primary security.

Moreover, there are different types of deposit schemes.

E.g. FDR, MDS, Monthly Money Maker, Double Benefit Scheme.

And the various recurring deposits are taken by the bank as security.

Now We will know what charge creation means.

"Charge creation is the establishment of the bank's right over the assets that the bank carries when giving a loan as security."

Now, the bank generates charges in various ways to establish rights over the loans that the bank gives and the land, building or primary security, working process, finished goods, or inventory taken against the loan.

In our country, charges are usually created on these properties in 6 ways

So that the bank can establish a right over these properties, if the client does not repay the loan, the bank can repay the loan by selling or cashing them.

There are 6 methods. Let's discuss these 6 methods.

1. Lien, Negative Lien. 2. Pledge, Negative Pledge.

3. Assignment. 4. Set Off. 5. Hypothecation. 6. Mortgage.

At First; We will discuss Lien

Lien is the Right to retain the goods or securities until the loan is repaid

That is, in the case of bank loans, for example, there are deposit schemes (FDR, Monthly Money Maker, Double Benefit Scheme, Recurring Deposit) Loans are given against different deposits.

In that case, these deposit schemes are deposited with the bank till the loan is repaid.

The bank releases these when the loan is repaid.

There may be different deposit schemes or different deposit accounts, these accounts remain, Lien until the loan is repaid.

This means that these are deposited with the bank until the loan is repaid.

In this case, we also use a negative lien. The negative lien is a little different.

The negative lien is just an undertaking

Here when the borrower takes a loan and the borrower gives an undertaking on the lands that are different from the borrower

except for the lands on which the mortgage is given or the charge is created,

the lands are not mortgaged and no charges are created.

These are still unencumbered or no charges have been created.

And if it ever gives a mortgage or creates a charge, it will create a charge with the permission of the bank.

Just the negative lien is an undertaking

If you want to know the details, you can watch that video created on Lien, Negative Lien, Pledge, Negative Pledge.

Now we will discuss Pledge.

Pledge is the bailment of goods as security for the payment of a Loan.

The borrower keeps the stock or finished goods in the bank.

In this case, the pledged goods are in the possession and control of the bank.

If there are perishable goods and the goods rot or the goods are lost, the responsibility falls on the bank.

That is why its popularity is declining day by day.

In the case of a pledge, if the borrower fails to repay the loan, the bank can repay the loan by selling the pledged goods.

And No permission from the court is required.

Now, We will discuss Negative Pledge

Negative Pledge is just a condition

The condition when approving an unsecured loan is that,

If the borrower wants to take a loan from somewhere else, he has to take a loan with the permission of the lender or the bank.

This is the negative pledge.

just a condition.

Problems can arise when a borrower borrows too much.

In that case, the bank stipulates that if he takes a loan from another bank or financial institution, he has to get permission from the existing lender.

Now, We will discuss Assignment

An assignment is the transfer of someone's debt or ownership to someone else

In this case, the borrower is owed by the borrower as security, e.g. Bills Receivable, Bills Against Work Order, Insurance Policy, etc. When a banker is entitled to accept the proceedings on his behalf, it is called assignment.

That is, it is a kind of devolution.

Here the customer gives his Bills Receivable or Bills Against Work Order as security.

The bank will withdraw the money on behalf of the customer and repay the loan.

Now, We will discuss set Off

Set-off is a right that the bank can adjust by debiting the borrower's other account (e.g. Savings Account or Current Account) and transferring it as a loan.

In this case, the bank is empowered to repay the loan by deducting the amount from the deposit account maintained by the customer other than the loan account.

This is the set-off

Now, We will discuss Hypothecation

When the borrower has an immovable property such as loan security; The granting of bank rights over the assets by the borrower in possession and control of finished goods, inventory, machinery, etc. is then called hypothecation.

In this case, the product or inventory will be in the possession and control of the borrower

If the borrower fails to repay the loan, the bank can repay the loan by selling the products or inventories.

But the permission of the court has to be taken.

The Court Permission is not required in case of pledge but it is required in case of hypothecation.

In case of hypothecation, the customer will have full control or possession.

The full rights will be given to the bank leaving it to the customer,

If the customer fails to repay the loan, the bank will be able to repay the loan by selling the hypothetical product and with the permission of the court.

Now, We will discuss Mortgage

The mortgage is the transfer of an interest in specific immovable property for the purpose of securing the payment of the loan

Bank rights over any immovable property are provided as loan security.

That right is established over land and buildings against loans

If the customer does not repay the loan or does not meet the terms & conditions or breaks the terms & conditions, then the bank can repay the loan by selling the immovable property.

In our country, registration has been made compulsory for all mortgages in Bangladesh as per Article 18 of the Registration Act 1908.

We use different types of mortgages and most of us use registered mortgages.

That is why we use these 6 methods.

Which one to use depends on the type of loan

Again, it depends on what We take as security.

If we give a mortgage loan and take land or building as a mortgage then we use the mortgage as the method.

And if we take different types of FDRs or different deposit schemes as mortgages, then we use Lien as a method.

And We use hypothecation for any floating asset.

Which method to use depends on the type of loan and the security.

Bills Receivable, Bills Against Work Order We use assignments as a method if these are taken as security.

Today's topic is very important for the loan department.

Today We learned how to create a charge on the securities that the bank takes when giving a loan in these 6 ways.

To be in a legally correct position, you have to be very careful when giving a loan.

The goal is to fill out the charge documents correctly and attach the stamp.

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