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Discounting Customer's Own Note And Taking On Hypothecation Of Trade Paper As Collateral Security |
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This section is from the book "Canadian Banking Practice", by John T. P. Knight.
This section is from the "" book, by .
Question 519. - In making advances to a customer who usually borrows by way of discounting trade paper, in what way, if any, is the bank's position improved by discounting the customer's own note and taking an hypothecation of the trade paper as collateral security? Granted the trade notes are drawn for not longer than three months.
Answer. - There are often good practical reasons for doing this, but the mere change of procedure does not necessarily improve the bank's position.
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