Q.What is Pledge?

Pledge is the delivery of goods as security for a loan — the borrower hands over possession of the goods to the lender while keeping ownership; if the debt is not repaid, the lender may sell the goods to recover the money.

Pledge is defined as the bailment of goods as security for the payment of a debt or the performance of a promise. It is one of the important forms of security accepted by commercial banks when they lend money.

Key features:

• The person who delivers the goods as security is the pledger (pawnor / borrower), and the person to whom they are delivered is the pledgee (pawnee / lender).
• Possession of the goods is transferred to the lender, but the ownership continues to remain with the borrower.
• The goods are held only as security; when the borrower repays the loan, the goods are returned. …