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It is derived from the term equity and equitable mortgage is a type of mortgage where the borrower offers their property as a security for getting a loan. The borrower does not transfer the ownership of the property to the lender. It is only creation of an interest in favour of the bank. In this type of mortgage the lender holds the property documents till the entire loan is repaid. If the borrower fails to do so, the Lender has the right to sell the property in an auction to recover the due loan amount. The lender has a claim over the property while the borrower still retains the legal title and possession. It is governed by the rules and regulations stated in the Transfer of Property Act 1882 section 58(f). The Borrower and Lender mutually agree upon the terms and conditions of an equitable mortgage agreement and there is no involvement of any third party. Equitable Mortgage is available in  Notified areas of the State. State Government notifies such areas through Gazette No...

  A lien is the right to retain goods until a debt is paid under Section 170 of the Indian Contract Act . A general lien under Section 171 allows bankers to retain any goods or securities of a customer for any general balance due, which gives banks stronger protection.

Under Section 128 of the Indian Contract Act, 1872 , the liability of the surety is co-extensive with that of the principal debtor unless it is otherwise provided in the contract. This means that the bank can proceed against the guarantor directly without first exhausting remedies against the borrower . The guarantor is liable to the same extent as the borrower.

  Bank Guarantee is an instrument issued by the Bank in which the Bank agrees to stand guarantee against the non-performance of some action/performance of a party. The quantum of guarantee is called the 'guarantee amount'. The guarantee is issued upon receipt of a request from 'applicant' for some purpose/transaction in favour of a 'Beneficiary'. The 'issuing bank' will pay the guarantee amount to the 'beneficiary' of the guarantee upon receipt of the 'claim' from the beneficiary. This results in ' invocation ' of the Guarantee. It acts as a financial safety net, reducing risk and building trust in large transactions by ensuring the beneficiary receives compensation if the applicant defaults. It is generally issued against Term Deposits and Bank charges fees, which is a consideration/income for it. Types of Bank Guarantees There are 2 popular types of bank guarantees: Performance Guarantee:  This type of bank guara...