The correct answer is an asset of the borrower. Important PointsCollateral security for a loan is an asset of the borrower. Collateral is an asset that a borrower offers to a moneylender as security for a loan. The lender has the right to take the asset used as collateral if the borrower is unable to repay the loan. Reserve Bank of India has deregulated interest rates to be charged to borrowers by financial institutions (other than NBFC- Micro Finance Institution). The rate of interest to be charged by the company is governed by the terms and conditions of the loan agreement entered into between the borrower and the NBFCs. Additional InformationThrough the provisions of the Banking Regulation Act, 1949, the banking system in India is regulated by the Reserve Bank of India. Shaktikanta Das is the present Governor of the Reserve Bank of India.