Intellectual Property as Financial Collateral: Ethical Dimensions of Securitisation and Default Enforcement in India

Abstract

In modern knowledge-driven economies, intangible assets like intellectual property (IP) form the bulk of business worth—typically 80-90%—but Indian financial institutions routinely overlook them in secured loan arrangements. Through doctrinal review of key laws including the SARFAESI Act 2002, IBC 2016, relevant IP legislation, and RBI guidelines, alongside comparisons with advanced systems in the US (UCC Article 9, Bowie Bonds), Singapore (IP Financing Scheme), and South Korea (Technology Guarantee Program), plus ethical scrutiny via distributive justice and human dignity principles, this study explores IP’s viability for collateral use, appraisal, and securitization amid borrower insolvency. In contrast, legal provisions support IP transfer, obstacles such as disjointed registries, inconsistent valuations, and limited institutional readiness block progress. International examples highlight success through cohesive systems, emphasising the urgency of integrated regulatory reforms and principled oversight to promote fair lending and broader economic participation.