Current Affairs · Banking Laws and Security Interest
A borrower hypothecates inventory stored on factory premises to secure a loan. With the bank's consent, the stock is moved to a professional warehouse and the warehouse receipt is handed over to the bank. What type of charge does this create and what is its legal nature?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1It becomes a lien, granting only retention rights without the right to sell.
- 2It becomes an assignment of the warehouse receipt, transferring primary liability to the warehouse keeper.
- 3It converts to a pledge because the bank obtains constructive possession of the goods via the warehouse receipt.✓
- 4It remains a hypothecation because ownership of the goods remains with the borrower.
Correct answer
It converts to a pledge because the bank obtains constructive possession of the goods via the warehouse receipt.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Current Affairs?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Banking Laws and Security Interest MCQs →Want more practice questions on Banking Laws and Security Interest?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Current Affairs · Banking Laws and Security Interest