Question

Tulip Ltd. took up a loan from a Punjab National Bank and issued its’ Debentures as Collateral Security. The bank to whom these debentures are issued:

(a) will be entitled to interest on such debentures.

(b) will not be entitled to interest on such debentures.

(c) will be entitled to interest on primary security.

(d) will not be entitled to interest on loan taken up from the bank.

Answer 1

Correct option is (b) will not be entitled to interest on such debentures.

Explanation: Tulip Ltd. took up a loan from a Punjab National Bank and issued its’ Debentures as Collateral Security. The bank to whom these debentures are issued: will not be entitled to interest on such debentures.