Collateral: Asset as Loan Guarantee
The question asks to identify the term for an asset owned by a borrower and pledged to a lender as security for a loan until the loan is fully repaid.
Defining the Terms
Let's analyze the given options:
- Interest: The amount charged by a lender to a borrower for the use of borrowed money. It's the cost of borrowing.
- Credit: Refers to the borrower's ability to obtain goods or services based on trust, promising future payment. It's about trustworthiness and borrowing capacity.
- Debit: An accounting entry that either increases assets or liabilities, or alternatively, decreases equity. In banking, it often signifies money taken out of an account.
- Collateral: An asset (like property or a vehicle) that a borrower pledges to a lender to secure a loan. If the borrower defaults, the lender can seize the collateral to recover their losses. This matches the question's definition of an asset used as a guarantee.
Conclusion
Based on the definitions, the specific term for an asset used by a borrower as a guarantee to a lender until a loan is repaid is Collateral.
Similar Questions
- The Indian Parliament had passed the State Banks (Repeal and Amendment) Bill, 2017 to merge _____ subsidiary banks with the State Bank of India.
- Vijaya Bank and Dena Bank are merged with which of the following banks?
- ________ refer to central bank purchases or sales of government securities in order to expand or contract money in the banking system and influence interest rates.
- When did the first nationalisation of banks take place in India?
- Which of the following bank launched ‘YONO Cash Point’, a cardless ATM service?
- How many banks were nationalised by the Union Government of India in the year 1980?
- What was the theme of The Financial Literacy Week 2019?
- Which bank recently (in April 2019) became the $3^{\text{rd}}$ largest bank of India after the merger with two other banks?
- Dena Bank and Vijaya Bank have recently merged with:
- Which bank was formed after the merger of The Bank of Madras, Bank of Calcutta and Bank of Bombay?
Important Questions from Banking Affairs
Who has been appointed as the new Chairman and Managing Director of SIDBI, in April 2021?
What is the picture on the reverse side of the new 2000 rupee note of the Mahatma Gandhi (New) series?
As per the provisions of Union Budget 2021-22, how many public sector banks have been lined up for disinvestment?
Which country has the largest number of bank branches in the world?
Which bank's tag line is, "Badhti ka nam Zindagi."?
