Daily Point 2065 - Hypothecation

 

The Banking Tutor

Daily Point 2065

Hypothecation

 

Hypothecation occurs when an asset is pledged as collateral to secure a loan. The asset owner does not give up title, possession, or ownership rights, such as income generated by the asset. However, the lender can seize the asset if the terms of the agreement are not met. Hypothecation is different from a mortgage, lien, or assignment.

Sekhar Pariti

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