When it comes to borrowing money to finance a large purchase, such as a home, or an automobile like a car, there are several terms that are used to describe the various ways in which the loan can be secured. The terms include mortgage, hypothecation, pledge, assignment, and lien.

While all of these terms involve using some form of collateral to secure a loan, they have different meanings and implications. Understanding the differences between these terms can help you to understand the lending process and the underlysing asset.

As an NBFC the biggest challenge is reconciliation of the installments received every month. Many of the NBFC’s that we have consulted with or spoke to during our Fintech sessions or Discover sessions have shared that Reconciliation has been their biggest challenge. With a Loan book of reasonable size you are likely to have half a dozen people working on reconciliation of Bank statements and assigning the credits to the appropriate Loan accounts. Depending on the age of your lending portfolio the activity could involve

The dramatic meltdown of some of the leading financial institutions in the country in the last few years has been because of the steady decline in the quality of their corporate loan portfolio. This has been attributed to some sections of the industry having seen adverse performance which in turn affected their ability to keep up their promises to pay. Following this was the Bank's inability to dispose off the collaterals associated with the loan.