Charge on Assets

When a borrower takes a loan, the lender may create a charge on specific assets (like property, machinery, or inventory) to secure repayment.

If the borrower defaults, the lender has the right to sell or take control of those assets to recover dues.

In India, charges on company assets are governed under the Companies Act 2013 and must be registered with the Registrar of Companies (ROC).

Types of Charge on Assets

Fixed Charge

• Created on specific assets (e.g., land, building)
• Cannot be sold without lender’s permission

Floating Charge

• Created on general assets (e.g., inventory, receivables)
• Can change during business operations

Why Charge on Assets Matters

• Protects lenders from default risk
• Helps businesses get loans
• Determines priority in case of liquidation

Charge vs Mortgage

• Charge: General claim on assets
• Mortgage: Specific type of charge on immovable property

"A company takes a loan and offers its factory as security—the lender creates a charge on that asset."