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Resource Mobilization — Entrepreneurship STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEntrepreneurshipResource Mobilization3 Marks
Question
What is collateral security?
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Answer

It refers to a security of fixed assets given by an entrepreneur to banks and financial institutions against a sum borrowed by him. The assets mortgaged with the institution for the sanction of a loan. Except certain government schemes, banks and financial institutions require physical (asset) security to release loans. Fixed assets like buildings, land, machinery, etc. Registered in the name of entrepreneur can be used as security to release loans.

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