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What is security bond? Why do banks issue the security bond?

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Question added by RASHID MUNIR , Assistant Accountant , EL SEIF ENGINEERING CONTRACTING LTD
Date Posted: 2016/05/22

It is a collateral on a loan. A agreement which states that ownership of a specific asset would be transferred to the holder if the principal does a default on repayment of loan.

Banks issue the bond to justify and give surety that the principal shall pay the loan and in case of default bank will give away the defined asset or the loan. 

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