6.5 Security Interest

6.5.1 Creating Security Interest in Movable Property by Bank By charge agreement, possession-based or constructive, over movable assets, receivables, or stock — documented and perfected per the law's requirements. 6.5.2 Types of Security SecurityPossessionBest forCreditor's comfort(i) PledgeBank takes possessionGoods, gold, documentsHigh — possession itself(ii) HypothecationBorrower keeps possessionStock and receivablesLower — floating goods(iii) Hire purchaseBank owns till final installmentVehicles, equipmentOwnership as security 6.5.3 Floating Charge A charge over a class of assets (present and future) that changes in the ordinary course of business, crystallizing on default or a trigger event. It hovers over the business and lands on the assets at the crunch. 6.5.4 Perfection of Security Interest Perfection — registration/filing or possession as the security's type requires — makes the charge effective against third parties and sets its date. Unperfected security loses the priority race. 6.5.5 Priority of Security Interest Priority generally follows perfection's time: first in time, first in right; then statutory priorities (taxes, liquidation costs) carve ahead. Registration order and notice inquiries resolve the race. 6.5.6 Enforcement of Security Interest On default: demand, notice, then enforcement per the security's type — sale of pledged goods, seizure of hypothecated stock through process, repossession under hire purchase, appointment of receivers for floating charges — with the surplus returned to the chargor and the deficiency remaining a debt.