Question

why do lenders ask for collateral while lending ? give any three resons

Answer 1

If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment. Reduction of exposure in order to domore business with each other when credit limits are under pressure. Possibility to achieve regulatory capital savings by transferring or pledging eligible assets.

Answer 2

If the borrower fails to repay the loan, the lender has the right to sell the asset or collateral to obtain payment. Reduction of exposure in order to domore business with each other when credit limits are under pressure. Possibility to achieve regulatory capital savings by transferring or pledging eligible assets.

Hope you like it