Current Affairs · Banking Regulations & Prudential Norms
Under the revised regulatory framework for Small Finance Banks (SFBs), which of the following best explains the conceptual definition and requirement for an asset to be classified as 'Collateral Security' in credit transactions?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It represents the primary asset created from the loan proceeds which is specifically prohibited from having a registered or enforceable security charge.
- 2It is an unsecured personal or corporate guarantee provided by a regulated entity that is substituted for physical assets in transactions above ₹1 crore.
- 3It refers to any liquid financial instrument that is exempt from a formal lien and is held in the bank's own investment portfolio until maturity.
- 4It is strictly categorized as an asset that possesses a security charge in favour of the lending institution to facilitate the recovery of the credit facility.✓
Correct answer
It is strictly categorized as an asset that possesses a security charge in favour of the lending institution to facilitate the recovery of the credit facility.
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