Under these collaterals we include securities issued by a Government, semi-government and local authorities. Shares of industrial and commercial companies also come in this category. The merits of such collaterals are quick sale. No difficult in transfer of ownership, stability in prices, loans can be secured from other banks, and prices thereof can be ascertained from stock exchanges.
Demerits of such collaterals may by such as responsibility of party paid-up shares may by on bank and certain securities may not be marketable. Hence, while accepting stock exchange securities as security, banks should always keep in view that they should be free from all defects of ownership, fluctuations in their prices should be limited, and that they should be fully paid.
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