Jargon of the Week: Index of Charges

Comments Off on Jargon of the Week: Index of Charges

Jargon of the Week: Index of Charges

The Index of Charges is a public registry maintained by the Ministry of Corporate Affairs (MCA) in India that details any charges created on a company’s or Limited Liability Partnership’s (LLP) assets. These charges are claims against a company’s assets that act as collateral for creditors. For example, if a company takes a loan and uses its property as security, a charge is created on that property. The Index tracks these charges and lenders check it to verify whether a charge exists against a particular asset so that they don’t end up lending funds against the security of the same asset.

Process of registering a charge

  1. When a company takes a loan or enters into a financial agreement where it secures the debt with its assets, a charge is created through a legal document outlining the terms of the secured loan.
  2. The company has to register this charge with the Registrar of Companies (ROC) within a stipulated timeframe (usually 30 days) after its creation for which it submits specific forms to the ROC.
  3. Once the charge is registered with the ROC, the details get uploaded to the Index of Charges maintained by the MCA.

Consequences of Non-Registration:

For the Lender: The most significant consequence is that the unregistered charge may not be enforceable in court by the Lender. This means the lender may not be able to recover their dues if the company defaults on the loan.

For the Borrower Company: The ROC may impose penalties for non-compliance.


  1. The Index provides transparency to lenders and other stakeholders about how far the property of the company is encumbered. This allows them to assess the level of risk associated with lending or transacting with the company.
  2. It creates a public record of the company’s secured debt. This can be helpful for potential investors, suppliers, and other interested parties who want to gauge the company’s financial health.
  3. It also establishes the priority of claims in case of insolvency. Creditors with registered charges have a higher priority on the company’s assets compared to unsecured creditors.

How does it help companies?

  • With a transparent record of existing charges, companies might find it easier to secure loans as lenders can better assess the available collateral.
  • A well-maintained record in the Index can improve a company’s creditworthiness in the eyes of lenders.
  • Companies can use the Index to check the creditworthiness and assess the financial health of their customers before deciding on credit terms.

🔄Back To Basics With Rubix

This series aims to simplify business terminology, making it accessible to everyone. We hope to share more concepts that enhance your knowledge. Stay tuned for upcoming posts, and feel free to share your thoughts and experiences or ask questions! Let’s build a community where knowledge is shared and celebrated.

📧info@rubixds.com  📞+91 22 4974 4274

Share this: