Security Trusteeship is a contractual arrangement amongst Borrower, Lenders (who are NBFCs, Banks & Financial Institutions), and the 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 including mortgage of immovable properties. Security Trustee holds charge on Borrower's assets including interest in underlying security on behalf of the multiple lenders. Thus under the arrangement, Hypothecation/Mortgage and any other charge on other securities is created by the Borrower in favour of 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.
In view of the advantages of Security Trusteeship arrangements, all NBFCs, Banks & Financial Institutions prefer Security Trusteeship Arrangements in financing small, medium and large corporates for all types of projects including Infrastructure Projects like Power, Telecom, Roads, Airports, Ports etc. and also other small and medium projects.
As Security Trustee, we provide following services