Commited to Explore Knowledge
Raj Verdhan 
Both Pledge and Mortgage are two different methods of creating a charge on securities of the borrowers as collateral against a loan provided by the commercial banks or financial/lending institutions. However, there is some key difference between Pledge and Mortgage.
There always need some securities when it comes to the requirement of a loan/debt from any financial institution. When anybody/borrower approaches the banks or finance companies to get a loan, the banks ask for some security.
Although both Pledge and Hypothecation are the modes of creating a charge over movable assets/properties of the borrowers to back up the loans/debts. However, there is some key difference between pledge and hypothecation.
The banks or financial institutions/companies pledge the goods of a borrower as collateral against the loans sanctioned to the debtor.
Hypothecation is one of the modes of creating a charge on security to secure the debts/advances. So let us discuss the meaning and definition of Hypothecation in banking.
Whenever an individual or firms need a loan/debt from any banks or financial institution, he has to provide some security/assets against the secured debt/loan. There are mainly two types of securities/ assets (Movable or Non-movable properties) which can be pledged to acquire a loan from any financial companies or banks.
Before we dig into the concept of the pledge in banking, you need to understand some other terms and conditions regarding debt/loans.
Whenever an individual or business firms require a loan/advance from any commercial banks or financial institutions or companies, then there are two kinds of loan available secured loans and unsecured loans.
In case of unsecured loans, no collateral is required, on the other hand, when it comes to secured loans collateral (security) is required to obtain such loans from any banks or financial institution.
The investors are suggested to diversify their portfolio into both equity funds (shares) and debt funds (bonds) to bypass the risks of loss as well as to magnify or stabilize the tentative returns. Therefore, one should clearly understand the difference between shares and bonds.
A right decision on the right investment opportunity could get you one step ahead in future. A right profitable investment act as an additional source of income in this environment to beat inflation.
There are two kinds of people in the society, one has a mindset to earn money by taking any amount of risk whereas the second one is those people who have a mindset to get fewer returns provided their investment must be secured.