Tips When Accepting The Marketable Securities.You will learn how the securities market works from the standpoint of the law, get acquainted with the accounting rules and the protection system.
10 Tips When Accepting The Marketable Securities
- Fall in Prices:
If the prices of excepted shares and debentures for loan fall abnormally then the bank may suffer loss.
- Not Negotiable:
If the security is not negotiable then the bank cannot transfer them to any other person or institution.
- Ownership:
If the rights of ownership on shares and debentures are not fair <»i original (disputed) then the banker can suffer loss.
[PRECAUTIONS]
While accepting the marketable securities, following precaution , should be observed.
- Margin:
There should be enough margins between security and the amount of loan because market value of these securities may decrease in future.
- Goodwill of the Company:
Shares and debentures of well-reputed and financially sound companies should be accepted only.
- Ownership:
Ownership of these securities should be carefully examined. Disputed ownership may become a source of loss for the banker.
- Careful Valuation:
The valuation of these securities should be d ‘termined carefully to avoid any confusion.
- Company’s Own Documents:
The bank should not grant loan against the security of borrower company’s on share and debentures.
- Custody of Security:
The bank should take marketable securities under its own custody before issuing loan against them.
- Additional Security:
The bank should try to keep a provision of additional security due to the chances of unexpected fall in prices of such securities.
- Re-acceptability:
The bankers should keenly observe the fact weather these securities are re-acceptable or not for further loan from the central bank.
- Stability of Value:
If the value of a security remains stable in future then there will be less chances of loss.
- Transferability:
Non-transferable documents should be avoided.
