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Documents
to be taken from Mortgager :
a) All material documents of a title like a sale
deed/gift deed/will/partition deed that conveys the title in his or her favor.
b) Parent documents for the prescribed period to
ascertain the flow of title.
c) Encumbrance certificated) Tax receipt of the property
e) Search report
f) Authenticity of the documents has to be checked
by a panel of advocates Valuation of property.
When an advance is allowed against the security of
an immovable property, it is necessary to get approved by an approved valuer.
While
valuating the property following may be taken into consideration:
a) Location of land and the consequent location
value b) Age of the building
c) The nature of its construction
d) Taxes paid
e) The extent of the land and the building area
f) The cost incurred for building construction
Leasehold properties:
If the land is leasehold, it is necessary to
ascertain whether the terms of the lease permit the borrower to assign or
transfer by the way of mortgage, the leasehold rights in the land.
Standing
Crops and other agricultural produce:
Banks advance loans routinely against the security
of the standing crops, agricultural produces, agricultural inputs like fertilizers,
pesticides etc. It remains in the form of a pledge. One of the most essential requirements of a pledge is the
actual or constructive delivery of goods pledged to the pledgee.
The term ‘constructive ‘delivery means that there is
no need for physical transfer of goods from the custody of the pledger to the
pledgee.
When the possession of goods is not transferred, The nature of charge created is hypothecation.
Hypothecation differs
from a mortgage in two respects. a) Firstly mortgage relates to the immovable property
where is hypothecation relates to movables.
b) Secondly, In a mortgage, there is a transfer of an interest in the property to the creditor but in hypothecation, there is only an obligation to repay the money and no transfer of interest.
In the case of pledge and hypothecation, the title
in goods is not transferred to the bank.
Precautions
to be taken against the advance of goods.
1. No advance should be made for speculation
2. The goods charged to the bank should have been
fully paid
3. The age of stock should be reasonable
4. The ownership should be ensured by verifying the
original invoices
5. As the price of goods or raw material pledged may
vary from time to time the bank should stipulate an appropriate margin at all times.
6. If the borrower has own goods apart from pledged
goods then he \ she should segregate the goods while storing in the
godown.
7. The goods should be adequately insured.
Points to
be taken into consideration:
The policy must be in force and the premium paid up
to date. The latest premium receipt must be kept on record by the bank.
The policy should be an original, duly stamped and
signed by the issuing authority. The
policy should be free from restrictive clauses.
Following
documents usually not accepted by the bank as security
a) Children endowment policy
b) The policy is taken out specifically for purposes like
estate duty
c) Children deferred policy
d) Policies with nominations under section 6 of
married woman property cat
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