A corporate borrower offers 'Book Debts' as collateral for a working capital limit. To ensure the security is effectively 'charged' in favor of the bank and to gain priority over other creditors, what is the mandatory requirement under the Indian Companies Act 2013?

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Banking · Legal Aspects of Banking

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

A charge must be created and registered with the Registrar of Companies (ROC) using Form CHG-1 within the prescribed statutory period.

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Answer 1

The bank must send a legal notice to every individual debtor of the company informing them of the charge.

Answer 2

A charge must be created and registered with the Registrar of Companies (ROC) using Form CHG-1 within the prescribed statutory period.

Answer 3

The bank must physically collect the invoices and store them in the bank's strong room until the loan is repaid.

Answer 4

The borrower must provide a list of all debtors on a plain paper signed by the company secretary every month.

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