What is negative pledge in SAP FS-CMS - Collateral Management System?

SAP Term: negative pledge

• Component: FS-CMS

• Component Name: Collateral Management System

• Description: The statement in which a bank declares itself prepared to grant a loan without any collateral, to a borrower, provided that the borrower agrees not to furnish collateral to other creditors. A negative pledge is intended to keep the debtor's assets unencumbered and to secure the value of debtor's collateral by not permitting it to be used for the benefit of other creditors by imposing a limited ban on sale. For this reason, a negative pledge includes a ban on encumbrances, a limited ban on sale and to make it complete from a legal point of view - a ban on additional undertakings.

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• Key Concepts: 
  Negative pledge is a type of security agreement in which the borrower agrees not to pledge any other assets as collateral for any other loan or debt. It is a contractual agreement between the borrower and the lender that the borrower will not pledge any other assets as collateral for any other loan or debt. This type of agreement is used in the FS-CMS Collateral Management System (CMS) to ensure that the lender has a secure interest in the collateral. 
  
  How to use it: 
  In order to use negative pledge in the FS-CMS Collateral Management System, the borrower must agree to not pledge any other assets as collateral for any other loan or debt. The lender must also agree to accept this type of security agreement. Once both parties have agreed, the negative pledge will be recorded in the CMS and will be used to protect the lender's interest in the collateral. 
  
  Tips & Tricks: 
  When using negative pledge in the FS-CMS Collateral Management System, it is important to ensure that both parties understand and agree to all of the terms of the agreement. It is also important to make sure that all of the necessary documents are properly filed and recorded in order to ensure that the lender's interest in the collateral is secure. 
  
  Related Information: 
  Negative pledge is just one type of security agreement that can be used in the FS-CMS Collateral Management System. Other types of security agreements include mortgage, lien, and deed of trust. It is important to understand all of these types of agreements and how they can be used in order to ensure that your interests are protected.