Auditaudit Staff asked 2 years ago

What does this statement exactly mean..?

Advances against supply bill – unless collaterally secured, should be classified as unsecured even if they have been accepted by the drawees

1 Answers
Best Answer
RaviRavi Staff answered 2 years ago

if borrower takes loan of 50 lakhs and after few months he submits supply bill to bank as proof that he has sold goods of 80 lakhs and he has right to recover and submits bill to bank. 
in such case these bills are not giving any security to bank hence loan will be unsecured even if supply bills are submitted unless some other collateral assets are given to bank

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