ABSTRACT
Lenders may extend credit to borrowers with or without security. If the reputation or record of a borrower reassures a lender sufficiently that the money will be repaid, it may be prepared to extend credit without security. In many developing countries including India, Sri Lanka and Malaysia, land is the preferred form of security among lenders. Lenders are hesitant to accept tangible movable properties, stocks and current assets, account receivables and book debts, livestock, etc. as collateral. The majority of lenders in India are prepared to give credit to potential borrowers only if they are able to provide adequate security to cover the principal money advanced and the interest. The laws provide for a wide range of security devises that lenders may take over immovable as well as movable property. The use of hypothecations is fairly common among Indian bankers. Nonbank institutions have also given loans on security of movable property subject to a hypothecation.
