Banking · Types of Charges on Securities
If a bank takes security over goods under a Pledge arrangement, which of the following statements correctly describes the operational implication?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The borrower is free to sell the goods without the bank's permission, provided the sale proceeds are deposited with the bank.
- 2The bank, or its authorized custodian, must take physical possession of the goods, obtaining a special property right.✓
- 3The bank retains constructive possession of the goods, while physical possession remains with the borrower.
- 4The charge must be registered with the Registrar of Companies (ROC) regardless of the borrower's constitution.
Correct answer
The bank, or its authorized custodian, must take physical possession of the goods, obtaining a special property right.
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