Blogger Tips and TricksLatest Tips And TricksBlogger Tricks

Tuesday, December 12, 2017

Banker’s right of set- off

Be the first to comment!
When a customer keeps two or more accounts at the bank, some of which are over drawn and some in credit, the bank has the right to combine such accounts and pay the resultant balance. When certain securities e.g. shares, debentures etc. are in the hands of a banker, he has a right of lien and not set-off.
A banker can exercise right of set-off provided the following conditions are satisfied:
The amount of the debt must be certain
The debt must be due and payable
The accounts must be between the same parties and in the same right
The debt due must be immediate and not a future debt
Liability should not be contingent
There should be no agreement to the contrary
The banker may exercise this right at his discretion
The banker has right to exercise this right before a garnishee order is made effective
The right to set-off all accounts arises immediately in the following instances:
On the death, mental incapacity or insolvency of a customer
On the insolvency of a firm, or on the liquidation of the company
On receiving a garnishee order
On receiving notice if assignment of a customer’s credit balance
On receiving notice of a second mortgage over security charged to the bank
0 comments for "Banker’s right of set- off"