Daily One Banking Term : ( 03 Sep 2017 )

■ Hypothecation: Charge against property for an amount of debt where neither ownership nor possession is passed to the creditor. In pledge, possession of property is passed on to the lender but in hypothecation, the property remains with the borrower in trust for the lender.

■ Identification: When a person provides a document to a bank or is being identified by a person, who is known to the bank, it is called identification. Banks ask for identification before paying an order cheque or a demand draft across the counter.

■  Indemnifier: When a person indemnifies or guarantees to make good any loss caused to the lender from his actions or others’ actions.