Definition
The delivery of movable goods (shares, FDRs, gold, commodities) by a borrower (pledgor) to a lender (pledgee) as security, retaining ownership but giving possession to the lender. Upon default, the pledgee can sell the pledged goods without court intervention under Section 176 of the Indian Contract Act. More secure than hypothecation because possession is with the bank.
Related Terms
Hypothecation
A charge created on movable assets (machinery, vehicles, stock, receivables) as security for a loan,…
Mortgage
A transfer of interest in immovable property as security for the repayment of money. The Transfer of…
Security Interest
A right, title, or interest of any kind upon property created in favour of a secured creditor as a s…
Bailment
The delivery of goods by one person to another for a specific purpose, with a condition to return th…
Need Expert Advice on Pledge?
For specific advice on how Pledge applies to your debt recovery matter, consult Advocate Subodh Bajpai — LLM, MBA (XLRI Jamshedpur). 25+ years of exclusive banking and debt recovery practice across DRT, SARFAESI, IBC, and NI Act.
Defined by Advocate Subodh Bajpai, Senior Partner, Unified Chambers and Associates