Loan Security Assignment
Loan Security Assignment is the process of linking securities or collateral provided by a borrower to a loan account. These assets act as security for the lender and can be used to recover outstanding amounts in case of loan default.
Frappe Lending allows users to assign multiple securities or collaterals against loans and apply validations throughout the loan lifecycle to ensure proper collateral management.
Did You Know?
Collateral assignment helps lenders reduce risk by maintaining a record of assets pledged against secured loans.
Accessing Loan Security Assignment
Loan securities can be assigned from the Loan Security section in Frappe Lending.
Home > Lending > Loan Security > Loan Security AssignmentPrerequisites
Before creating a Loan Security Assignment, ensure that the required security records are available.
- Loan Security: Create the security details that will be pledged against the loan.
Creating a Loan Security Assignment
Follow these steps to assign security or collateral to a loan:
- Open the Loan Security Assignment list.
- Click on Add Loan Security Assignment.
- Select the Loan Account against which the security needs to be pledged.
- Add the required Loan Security.
- Enter the security price manually if a Loan Security Price is not configured.
- Save and Submit the assignment.
Loan Security Assignment Details
| Field | Description |
|---|---|
| Loan Account | The loan account against which the security or collateral is assigned. |
| Loan Security | The asset or collateral pledged by the borrower as security for the loan. |
| Security Price | The valuation amount of the assigned security. This can be entered manually if no configured security price is available. |
Security Assignment Validation
Frappe Lending applies validations while assigning securities to ensure accurate collateral records.
- The loan account must be selected before assigning security.
- A valid loan security must be added to the assignment.
- Security valuation details should be available either through configured pricing or manual entry.
Note
Multiple securities can be assigned against a single loan, allowing lenders to maintain complete collateral records throughout the loan lifecycle.
Best Practices
- Ensure all required Loan Security records are created before assignment.
- Verify the security valuation before submitting the assignment.
- Maintain updated collateral details for accurate loan risk management.
- Review assigned securities regularly during the loan lifecycle.
