My friend wants to avail loan from a bank and the bank wants the security of building. Though this is very common, the bank wants the building to be transferred and says that it will retransfer the building to my friend on payment of dues. Is this allowed under law?
The transaction referred to is allowed under Law and is called “English Mortgage”. The procedure is that the owner of the building transfers the property to the Bank agreeing to pay the entire amount on some date and the bank in turn agrees to retransfer the property to the owner on payment of all the dues on or before the agreed date. On payment of all dues, the mortgaged property will be recovered.