What are the Types of Bank Charges

Charge mean where in a transaction for value both parties evidence an intention that property existing or further shall be made available as security for payment of a debt and that the creditors shall have a present right to have it made available, there is a charge, even though the present legal right which is contemplated can only be enforced at some future date, and though the creditor gets no legal rights of property, either absolute or special or any legal right to possession but only gets the right to have the security made available by an order of the court.

A charge may be classified as:

  1. Fixed charge: A charge is said to be fixed if it is made specifically to cover definite and ascertained assets of a permanent nature or assets capable of being ascertained and defined e.g., charge on land and building or heavy machinery.

    It precludes the company from dealing with the property charged without the consent of the charge-holder.

  2. Floating charge: It is a charge on property which is constantly changing e.g., stock.

    The company can deal with such property in normal course of its business until it becomes fixed on the happening of an event. Thus, it is a charge on the assets of the company in general.