what is collateral? why do lemders ask for collateral while lending.
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something pledged as security for repayment of a loan, to be forfeited in the event of a default is called collateral.
If the borrower fails to repay the loan, thelender has the right to sell the asset orcollateral to obtain payment. Reduction of exposure in order to do more business with each other when credit limits are under pressure. Possibility to achieve regulatory capital savings by transferring or pledging eligible assets.
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If the borrower fails to repay the loan, thelender has the right to sell the asset orcollateral to obtain payment. Reduction of exposure in order to do more business with each other when credit limits are under pressure. Possibility to achieve regulatory capital savings by transferring or pledging eligible assets.
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Collateral is that assets which you give in a security in that situation when you unable to return your loan in this situation they will claim on that asset which you keep as a security.
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