NISM Certifications · NISM-Series-VI: Depository Operations · Special Services - Pledge and Hypothecation
In a depository pledge under the Depositories Act and SEBI regulations, what is the term used for the BO who creates the pledge by offering securities as collateral?
The beneficial owner who gives securities as collateral for a loan is called the pledgor. The lender receiving the security interest is the pledgee. The issuer is only the company that originally issued the securities, so it is not a party to the pledge.
- APledgorCorrect
- BPledgee
- CHypothecator
- DIssuer
Explanation
The BO who offers securities as security for a loan is the pledgor. The pledgee is the lender in whose favour the pledge is created. Hypothecator is a different term used for non-possessory charge arrangements, and the issuer is the company that issued the securities.
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