What are the collateral security patterns accepted for short-term and working capital finance?
For working capital and short-term loan finance, the primary security is charged on current assets. Financial institutions (FI) while extending project finance generally get first charge on block assets of the company in their favour. In respect of short-term and working capital financed by us, the collateral security generally accepted is by way of a second charge on block assets and/or mortgage of a specific property of the company/ guarantors, besides having hypothecation charge on current assets of the company as primary security. What is the pattern like as in right of first lien in case the same asset is kept as collateral with FIs and banks? In cases wherein the same assets are kept as collateral with FIs and banks, the nature of lien is by way of first pari-passu charge backed by pari-passu agreement between the concerned FIs and banks. Is it necessary to have foreclosure laws to expedite NPA recoveries? Are there any loopholes to be plugged in the draft bill? The foreclosure l
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