Introduction - 

     Loan is an arrangement of advancing a sum of money on interest for a pre-agreed period sometimes for a particular purpose as well. Commercial banks usually sanction the three types of loan namely-(a) Term loan, (b) Participation loan (c) Personal loan. Section 5(a) of the Banking Regulation Act, 1949 Speaks about Secured Loan.

What is Secured Loan 

        A Secured Loan is a loan in which the Borrower pledges some assets  (such as Valuable Property.) as collateral for the loan, which then becomes secured debt. The market value of the security assets must not be less than the amount of the loan at any time till the loan is repaid. The Opposite of a secured loan, there is an unsecured loan or advance, means loan or advance is not secured.

Example - Mortgage Loan is Secured Loan

Definition of Secured Loan 

According to Section 5 (a) of the Banking Regulation Act, 1949 is Secured Lone means a loan or advances made on the security of assets the market value of which is not at any time less than the amount of such loan or advance.

Features of Secured Loan 

1) Security loan must be made on the security of tangible assets. Examples - Gold, silver,  land, buildings etc.

2) The market value of such security must not be less than the amount of the loan at any time till the loan is repaid.

See also 

Difference Between Secured Loan and Unsecured Loan 


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