Trust Receipt

Mechanism by which goods or Bills of Lading in respect of which the bank has been granted a Pledge are released to the Pledgor for the purpose of sale against an acknowledgement by the Pledgor that it holds the goods and the proceeds of sale on trust for the bank, the effect of which is that the bank's possession for the purposes of the Pledge is maintained. Typically used to allow a bank to release goods or Bills of Lading to a Pledgor to repay financing provided by the bank to the Pledgor from the proceeds of sale of the goods.

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