Non-SEBI regulated
Security Trusteeship
Primarily used in Consortium or Multiple Banking Arrangements for corporate lending.
Also applicable for Sole Banking transactions to streamline documentation and security management.
Role
- Acts on behalf of lenders to hold and manage security interests and documents.
- Facilitates creation, perfection and enforcement of charges on borrower assets.
- Serves as a neutral, independent entity ensuring fairness and compliance.
- Operates as a single point of contact for all charge-related matters across lenders and borrowers.
Functions
- Holds security documents, including pledge, hypothecation and mortgage documents.
- Maintains safe custody and secure storage of title deeds and related instruments.
- Executes and administers Security Trustee Agreements (STA) among the borrower and lenders.
- Facilitates charge creation, modification and satisfaction with statutory authorities, including ROC and CERSAI.
- Supports enforcement of security in the event of borrower default.
- Enables easy substitution or addition of lenders with minimal documentation.
Benefits
Top Management of Bank
- The Trustee issues holding or confirmation letters only after full compliance with post-sanction formalities.
For Lenders
- Different lending terms and conditions under a multiple-bank or consortium arrangement can be incorporated in a single set of documents under a legally valid, binding and enforceable ST arrangement.
- A single charge is held in favour of the Trustee instead of multiple charges by individual lenders.
- Reduces procedural and operational risks by delegating security management to professionals.
- Allows management to focus on core banking and strategic functions.
- A neutral Trustee eliminates conflict of interest.
- Provides efficient coordination among consortium members and stakeholders.
- Enforces security in the event of default and represents lenders' rights.
For Borrowers
- A single interface for security creation and documentation.
- Reduced administrative burden and faster execution.
- Flexibility for lender changes or participation without complex re-documentation.
Service information & downloads
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