Question

Why do banks do ask for security while lending

Answer 1

BANKS ASK SECURITY OR COLLATERAL WHILE LENDING TO ASSURE THAT THE BORROWER WILL RETURN THE Money TO BANK IN PRESCRIBED TIME.IF HE FAILS BANKS HAVE LEGAL Authority TO SELL THE COLLATERAL AND GET ITS MONEY BACK.





HOPE IT HEPLS U

Answer 2

Hiya there!

Banks ask for collateral security for lending because:-

1) Used to obtain money in case of non-repayment: Banks hold their assets(collateral assets) with them so that in case of non-repayment, they can sell it for obtaining money. As a result, people( in most cases) ensure that they repay the loan of the bank correctly.

2)Guarantee of repayment : In most cases, in order to avoid further troubles, people repay their loan within the specified period.

Among them the 1st point is more important.

Hope it helps :)