Characteristics of Good Security In Banking.Obtaining a loan has become increasingly easier. Thanks above all to the online financing market, which has made it possible.
Characteristics of Good Security In Banking
- Stable Price:
There might be less chances of loss for the banker if the price of security remains stable.
- Easily Saleable:
A good security can be sold easily in the market. So, that loan can be recovered easily if necessary.
- Easy Price Determination:
If the price of security can be determined easily then it is known as good security.
- Safety:
Easy safety or protection of security from damages, weather effects and other dangers makes it good.
- Durability:
Durable goods are considered as good securities because they can be stored for a long period.
- Un-disputed:
The asset accepted as security should be undisputed and clear from all burdens.
- Source of Income:
A good security should be a source of income for the lender (Bank) during the period of loan.
- Increase in Price:
If the price of security increases with the passage of time then it will be a good one.
- Re-Acceptance:
If a security can be presented further for another loan. Such security is considered as good security.
- Reasonable Sale Price:
A good security is that which can be sold at reasonable price in case of non-payment.
- Restriction by Govt.:
The security must not be restricted or banned by the government for accepting against loan.
- Already Under Debt:
Any asset or property already accepted, as security will be worthless for the banker.
- Insured Security:
Insured securities are considered good securities for loan, because insurance companies take the responsibility to indemnify any accidental loss occurred from insured security.
- Portability and Transferable:
A security should be easily portable and transferable, so it can be transferred from one place or person to another place of person at minimum cost.
- Low Storage Expenditure:
If a security can be presented further for another loan. Such security is considered as good security. Any security, which can be stored at lowest cost, will be considered as good security.
