Security for an Advance

Abstract

When a customer lodges some form of security for an advance — whether it be title deeds, stocks and shares, an assurance policy, a debenture, or a guarantee or some other asset or instrument — he or she does so to encourage the bank to make the advance. The bank has no intention of relying on the security to repay the advance unless it is forced to do so, but in case this should happen the bank will want to ensure that it has a legal title to the asset or that written instructions are given by the customer for the proceeds of its sale or redemption to be sent to the bank.