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Question
What is collateral security for a bank loan?
Short Answer
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Solution
Commercial banks typically require collateral security when granting loans. This means the borrower must provide an asset that the bank can easily sell if the borrower fails to repay the loan. Common forms of collateral include shares, life insurance policies, fixed deposit receipts, and valuable metals. Additionally, in some cases, banks may also ask for personal guarantees from financially sound individuals.
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