Loans security:
It is in the interest of a bank to recover all the loans with the interest thereon at the due dates. To ensure this, the banks try to obtain security (whose value is greater than the loan amount) from the potential borrowers as backing for the prompt recovery of the loans.
Such security may be in the form of a house / residential flat / any landed property like factory land, or Plant and Machinery, Life Insurance policies with surrender values, Gold ornaments, Fixed Deposit receipts investors’ receivable vehicles like car / two wheelers/ Buses / Truck etc.