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 Different modes of charging securities

Bank tend to safeguard their advances by taking different kinds of securities .The main purpose of taking a security is to fall back on it
in case the loan is defaulted. Bank take movable properties immovable properties or a debt as securities for a loan .The method of
creating charge over a property depends upon the nature of property and nature of charge .For example ,when a bank give a loan
against the security of gold ornaments , it takes the possession of the ornaments whereas when it advances against the security of a
vehicle or a house property , the does not take physical possession.
Types of charges
Bank charge over property confines itself to one or more of the following six types of charges.
a. Assignment
b. Lien
c. Set-off
d. Hypothecation
e. Pledge
f. Mortgage

 Hypothecation
The term hypothecation means a charge in or upon any movable property , existing or futre , created by a borrower in favour of a
secured creditor, without delivery of possession of the movable property to such creditor , as a security for financial assistance and
includes floating charge ans crystallization of such charge in to fixed charge on movable property.
The mortgage of movable property is called hypothecation .It may be described as a transaction wherebt money is borrowed by the
debtor on the security of the moveable property without transferring either the property or the possession to the creditor .Hart
describes hypothecation as a charge against property for an amount of debt where neither ownership nor possession is passed to the
creditor. Hypothecation differs from pledge because goods remain in the possession of the borrower and are equaitably charged in
favour of the creditor under documents signed by the borrower. However the document provides for covenenant whereby the borrower
agrees to give up possession of the goods when called upon to do so by the creditor .Once the possession is given up the charge
becomes transformed into pledge.
Hypothecation differs from mortgage in two respects.Firstly , mortgage relates to immoveable property whearas hypothecation relates
to movables.Secondly in a mortgage , there is transfer of interest in the property to the creditor but in hypothecation there is only
obligation to repay money and no transfer of interest.

 Pledge
Pledge means bailment of goods for purpose of providing security for payment of debt or performance of promise.
The person , whose goods are bailed is called the pawnor , the person who takes the goods as security is called the pawnee.
The followings are the legal implications of the property is retained by the pawnor , which is subject only to the qualified interest
which passes to the pawnee by the bailment.
One of the main and most essential requirements of a pledge is the actual or constructive delivery of the goods to the pawnee.By
constructive delivery , it is meant that there need be no physical transfer of goods from the custody of the pawnee or of the any peron
authorized to hold them on his behalf.
Goods may be delivered by one of the following ways
1 By handling over the key of the godown , in which the goods are kept.
2 .By attornment I e if goods are in public warehouse , the warehouseman acknowledges to the pawnee that he will hold the goods
thereafter on behalf of the pawnee.
3 .Handling over thee document of title to goods such as railway receipt , bill of lading , warehouse receipts etc.
4.Even if goods are in possession of the pawnor , he may acknowledge that he holds them thereafter for and on behalf of the pawnee.
5. Am agreement of pledge may be implied frtom the nature of the transaction or the circumstances of the case .However , an
agreement in writing clearly laying down the terms and conditions leaves no ambiguity.

 Mortgage
Mortgage is a transfer of interest in inmovable property to secure ann advance loan oer an existing debt or a debt or performance of an
abligation .Transfer of property act contemplates six types of mortgage
a) Simple mortgage
b) Mortgage by conditional sale
c) Usuafructury mortgage
d) English mortgage
e) Mortgage by deposit of title deeds
f) Anomalous mortgage
In simple mortgage , the mortgage is by deposit of title des and in English mortgage , the possession of the mortgage properties is not
given to the mortgage
In usufructuary mortgage and in mortgage by conditional sale , possession of the mortgaged properties is normally given to the
mortgage
In the case of simple mortgage and mortgage by deposit of title deeds , the mortgagee has a right to proceed against the property
mortgaged and also personally against the mortgagor.

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Mortgage is to be created by way of deed and requires to be registered under the registration act.
Mortgage by deposit of title deeds is not required to be created by way of a deed and does not require registration.
The rule of priority in case of successive mortgages is in the order of the time they are created.
Limitation period for filing a suit for foreclosure is thirty years that date mortgage debt becomes due.
Limitation period for filing a suit for sale of mortgages property is twelve years from the date mortgage debt become due.
Enforcement of mortgage is government by the code of civil procedure 1908 .suit for sale of mortgages properties should be filed in
the court within whose jurisdiction the mortgage property is situated.
In a suit for sale of mortgaged properties , the court first passes a preliminary decree and thereafter final decree.

 Lien
Lien is the right of the banker to retain possession of the goods and securities owned by the debtor until the debt due from the latter is
paid .The banker’s lien is an implied pledge. A banker acquires the right to sell the goods which came into its possession in the
ordinary course of banking business, in case the debt is not paid .Section 171 of the Indian contract act 1872 gives to the banker an
absolute right of general lien on all goods and securities received by the banker. However, when a customer inadvertently leaves a
packet containing certain share certificates, life insurance policies , fixed deposit receipts of other banks etc, while leaving the bank
premises , the banker will have no right of lien over those securities those were not given to the banker in the normal course of
banking business. Automatic right of set off arises in the following circumstances
On the death , insanity or insolvency of the customers.
On the insolvency of a partner of a firm ot winding up of a company
On receipt of a garnishee order.
On receipt of notice of assignment of a customer credit balance.

 Assignment
It is a mode of providing securities to a banker for an advance .It is transfer of a right , property or a debt .The transfer is called
assignor and the transferee assignee.
Borrowers generally assign the actionable claims to the banker as security for an advance. It is transfer of right ,property or debt.The
transferor is called assignor and the transferee assignee.
Borrowers generally assign the actionable claims to the banker as securities for an advance.In terms of section 130 of the transfer of
property Act, the transfer of an actionable claim can be effected only by the execution of an instrument in writing , signed by duly
authorized agent.Section 3 of the Transfer of property act defines an actionable claim to any debt other than a debt secured by
mortgage of immovable property ,or by hypothecation of or pledge of movable property or two beneficial interest in movable property
,not in the possession of the claimant , which the civil courts recognize as affording grounds of relief .All the rights and remedies of
the transferor vest in the transferee .The transferee of an actionable claim takes it,subject to all the liabilities and equities to which the
transferor was subject on the date of transfer.
In banking practice , a borrower may assign the book debt, money due from Government department and life insurance politics as
securities for an advance.
As regards the mode of assignment, no particular form or words is necessary for effecting an assignment , if the intention is clear from
the language used .An assignment can be absolute or by way security.
An assignment may be a legal or equitable assignment .A legal assignment is the absolute transfer of an actionable claim, must be in
writing and signed by the assignor. The assignor informs his debtor , also in writing , intimating the assignee’s name and address.
The assignee also serves a notice on the debtor and seeks his confirmation of balance assigned .If the formality is not fulfilled , the
assignment is called an equitable assignment.
Under the provisions of the insurance Act , a life insurance policy is assignable by an endorsement on the back of the policy or by a
separate deed of assignment, but notice of such assignment must b e given to the insurer by the assignee or assignor.

 Banking services
A bank's job is to provide customers with financial services that help people better manage their lives. As technology advances and
competition increases, banks are offering different types of services to stay current and attract customers. ... This ensures you get the
most out of your current financial institution.
the various ways in which a bank can help a customer, such as operating accounts, making transfers, paying standing orders and
selling foreign currency.
The handling of daily financial matters necessitates the availability of banking services, such as accounts and instruments for using the
account (eg payment cards). Wages and salaries, pensions and other regular payments are deposited in the account. Bills are paid with
the help of payment services offered by banks, and various payment cards are used to withdraw cash from ATMs and to pay for
purchases. Banks are also responsible for the intermediation of financing and the granting of loans.This section presents the most
important banking services needed by consumers/customers: basic banking services, deposits and loans.

 Demand draft
A demand draft is a negotiable instrument similar to a bill of exchange. A bank issues a demand draft to a client (drawer), directing
another bank (drawee) or one of its own branches to pay a certain sum to the specified party (payee)A demand draft can also be
compared to a cheque. However, demand drafts are difficult to countermand. Demand drafts can only be made payable to a specified
party, also known as pay to order. But, cheques can also be made payable to the bearer. Demand drafts are orders of payment by a
bank to another bank, whereas cheques are orders of payment from an account holder to the bank

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 Travelers' cheque
A traveler's check is a medium of exchange utilized as an alternative to hard currency. Travelers often used traveler's checks on
vacation to foreign countries. In 1891, American Express first introduced the checks. ... The issuing party, usually a bank, provides
security against lost or stolen checks. A traveler's cheque[a] is a medium of exchange that can be used in place of hard currency. They
can be denominated in one of a number of major world currencies and are preprinted, fixed-amount cheques designed to allow the
person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.
They were generally used by people on vacation in foreign countries instead of cash, as many businesses used to accept traveler's
cheques as currency. The incentive for merchants and other parties to accept them lay in the fact that as long as the original signature
(which the buyer is supposed to place on the cheque in ink as soon as they receive the cheque) and the signature made at the time the
cheque is used are the same, the cheque's issuer will unconditionally guarantee payment of the face amount even if the cheque was
fraudulently issued, stolen, or lost. This means that a traveler's cheque can never 'bounce' unless the issuer goes bankrupt and out of
business. If a traveler's cheque were lost or stolen, it can be replaced by the issuing financial institution.

 Managers' cheque
A Manager's Check(MC) is a cheque issued by the bank, payable to a payee as indicated by the person who buys the MC. It is often
used in situations when the beneficiary does not accept cash or personal cheques. Manager's cheque is one of the most secure mode of
payment with a validity of six months. This is done thru paying cash to the bank, then the cheque is being issued in the name of the
receiving company or individual. This is mostly being requested to ensure that a payment cheque will not bounce just like the
disadvantage of a personal cheque payment. Manager’s Cheques are a safe, convenient and smart way of making payments. They can
be used instead of large sums of money or regular cheques and can be easily replaced if lost or stolen.Avoid the embarrassment of
having your cheques constantly refused, by purchasing a Bank of Montserrat Limited Manager’s Cheque.

 Mail transfer
A mail server (also known as a mail transfer agent or MTA, a mail transport agent, a mail router or an Internet mailer) is an
application that receives incoming e-mail from local users (people within the same domain) and remote senders and forwards outgoing
e-mail for delivery. A computer dedicated to running such applications is also called a mail server. Microsoft Exchange,
qmail, Exim and sendmail are among the more common mail server programs.It is a software that transfers electronic mail messages
from one computer to another using a client–server application architecture. An MTA implements both the client (sending) and server
(receiving) portions of the Simple Mail Transfer Protocol, The terms mail server, mail exchanger, and MX host may also refer to
a computer performing the MTA function. The Domain Name System (DNS) associates a mail server to a domain with an MX
record containing the domain name of the host(s) providing MTA services.A mail server is a computer that serves as an electronic post
office for email. Mail exchanged across networks is passed between mail servers that run specially designed software. This software is
built around agreed-upon, standardized protocolsfor handling not only mail messages, but also any data files (such as images,
multimedia or documents) that might be attached to them.

 Telegraphic transfer
A telegraphic transfer (TT) is an electronic method of transferring funds utilized primarily for overseas wire transactions.
These transfers are used most commonly in reference to Clearing House Automated Payment System (CHAPS) transfers in the U.K.
banking systemLargely obsolete method of transferring funds through a telegraph or telex link. Also called wire transfer, it has been
replaced by secure cable and wireless telecommunications networks. Telegraphic Transfer is the fastest mode of money transfer and is
used for payments, in or out of Malaysia.Transfer of funds by telegraph, telex, cable, or SWIFT from a bank to its branch or another
bank authorising the payment of funds to a specified account Types of Telegraphic Transfer as Local Telegraphic Transfer (between
CIMB Bank branches and Rentas interbank. Foreign Telegraphic Transfer (foreign currency).

 MICR
MICR (magnetic ink character recognition) is a technology used to verify the legitimacy or originality of paper documents, especially
checks. Special ink, which is sensitive to magnetic fields, is used in the printing of certain characters on the original documents.
Information can be encoded in the magnetic characters.The use of MICR can enhance security and minimize the losses caused by
some types of crime. If a document has been forged - for example, a counterfeit check produced using a color photocopying machine,
the magnetic-ink line will either not respond to magnetic fields, or will produce an incorrect code when scanned using a device
designed to recover the information in the magnetic characters. Even a legitimate check can be rejected if the MICR reader indicates
that the owner of the account has a history of writing bad checks.Retailers commonly use MICR readers to minimize their exposure to
check fraud. Corporations and government agencies also use the technology to speed up the sorting of documents.

 Payments
A payment is the trade of value from one party (such as a person or company) to another for goods, or services, or to fulfill a legal
obligation.Payment can take a variety of forms. Barter, the exchange of one good or service for another, is a form of payment. The
most common means of payment involve use of money, cheque, or debit, credit or bank transfers. Payments may also take
complicated forms, such as stock issues or the transfer of anything of value or benefit to the parties. In US law, the payer is the party

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making a payment while the payee is the party receiving the payment. In trade, payments are frequently preceded by an invoice or
bill.In general, the payee is at liberty to determine what method of payment he or she will accept; though normally laws require the
payer to accept the country's legal tender up to a prescribed limit. Payment is most commonly effected in the local currency of the
payee, unless if the parties agree otherwise. Payment in another currency involves an additional foreign exchange transaction. The
payee may compromise on a debt, ie., accept a part payment in full settlement of a debtor's obligation, or may offer a discount, for
example, for payment in cash, or for prompt payment, etc. On the other hand, the payee may impose a surcharge, for example, as a
late payment fee, or for use of a certain credit card, etc.The acceptance of a payment by the payee extinguishes a debt or other
obligation. A creditor cannot unreasonably refuse to accept a payment, but payment can be refused in some circumstances, for
example, on a Sunday or outside banking hours. A payee is usually obligated to acknowledge payment by producing a receipt to the
payer. A receipt may be an endorsement on an account as "paid in full". The giving of a guarantee or other security for a debt does not
constitute a payment.

 ABBS
Any Branch Banking System(ABBS) provide customers with a most convenient service for banking from any branches located near to
you. Keeping in mind all your needs, we have introduced Any Branch Banking System. Â You can withdraw or deposit cash, receive
information about the balance in your Account or obtain a statement of accounts from any of the nearest Western Development Bank
branches.ABBS service charge is free in our bank. So, go ahead, enjoy the freedom of banking anytime, anywhere.Bank provides
ATM Service. through its own dozens of outlets. ABBS Service. most bank provides Any Branch Banking Service(ABBS) through it's
all branches accross the country.
Endless procedures, rush hour traffic, long queues, how many times have you had to put up with the inconveniences of conventional
bankingHaven't we all sometimes wished that our banks were closer or opened 24 hours a day, 7 days a week? How many times have
you taken the risk of carrying huge sums of money to the bank or wanted to take out your money but found out that your bank was
closed for a holiday... Well, not anymore!!! Keeping in mind all your needs, we've introduced Any Branch Banking System with an
objective to provide you with the most convenient service possible. Now, you can withdraw or deposit cash, receive information about
the balance in you're A/C or obtain a statements of accounts from our any branchNo more long hours or queues, your work gets over
in just a few minutes. So, go ahead, enjoy the freedom of banking…anytime, anywhere.

 Swift code
A SWIFT code is an international bank code that identifies particular banks worldwide. It's also known as a Bank
Identifier Code (BIC). CommBank usesSWIFT codes to send money to overseas banks. ASWIFT code consists of 8 or 11
characters. ... You'll need to give this code to anyone sending money to you from overseas, A SWIFT code is an international bank
code that identifies particular banks worldwide. It’s also known as a Bank Identifier Code (BIC). CommBank uses SWIFT codes to send
money to overseas banks.A SWIFT code consists of 8 or 11 characters. SWIFT codes and BIC codes are the same thing and the terms are
interchangeable. Other terms used by banks overseas include:
1. CHIPS (Clearing House Inter-Bank Payment System) – US and Canada only
2. NCC (National Clearing Code)
3. BSC (Bank Sort Code)
4. IFSC (Indian Financial System Code).
If you’re sending money to someone overseas, you’ll need to get the recipients SWIFT in order to do the transfer

SHIVA SHARAN K.C.