Security Trusteeship is a contractual arrangement among a Borrower, Lender/s (who are Banks, Financial Institutions & NBFCs) under a Bilateral / Consortium / Multiple arrangement and a Security Trustee. This arrangement is established by executing a document called Security Trustee Agreement (STA)
•Pursuant to the execution of STA, Borrower is required to create all securities in favour of Security Trustee such as mortgage of immovable properties, hypothecation, etc.
•Security Trustee holds charge on Borrowers assets including interest in underlying security on behalf of a Single / Multiple / Consortium Lenders.
•Thus under Security Trustee Arrangement, Hypothecation/Mortgage and any other charge on other securities is created by the Borrower in favour of a single entity called "Security Trustee" for the benefit of lenders.
•In other words, lenders are represented through Security Trustee as their sole representative. This being contractual arrangement is absolutely legal, valid, binding and enforceable.
Clik here to know Benefits of Security Trustee (ST) Arrangement
