Legal nature of third-party collateral in lending activities at commercial banks

Abstract

Lending is a primary, crucial credit activity and a key profit-generating operation at commercial banks. Accompanying the lending activities of commercial banks are measures to secure loans, ensuring the repayment of the borrowed capital, preventing breaches, and addressing the consequences of defaulting on repayment obligations. Among the various methods of securing loans at commercial banks, using collateral from a third party to guarantee the fulfillment of obligations has become widespread. This research article analyzes and comments on the legal provisions regarding third-party collateral in lending activities at commercial banks, clarifying the legal nature and proposing solutions to enhance the legal framework in this regard.

Keywords: third-party collateral agreement, lending activities, collateralization of assets