BANKING AFFAIRS

Detailed explanation-1: -Do note that the banker can exercise the right of set-off only when the money owed to him is a sum certain, which is due, and where there is no agreement, express or implied to the contrary. Some important requirements to initiate set-off are; All the funds must prima facie belong to the customer.

Detailed explanation-2: -In order to cover a loan in default, a bank has a legal right to seize funds of a guarantor or the debtor. A settlement of mutual debt between a creditor and a debtor through offsetting transaction claims is also known as setoff.

Detailed explanation-3: -What is Set-off. It is the legal right of the bank to set off or adjust the debit amount against the credit amount in the balance of the same borrower. The right of set-off is also known as the right to balance debit with credit or a combination of accounts.

Detailed explanation-4: -(a) In case of a sole trader the account in his personal name and that in the firm’s name are deemed to be in the same right and hence the right of set-off can be exercised in case either of the two accounts is having debit balance.

Detailed explanation-5: -PARTNERS/PARTNERSHIP Where a partner’s account shows credit balance, the right can be exercised for the dues of the partnership firm. But where the firm’s account shows credit balance, the bank cannot set off the credit balance against the debts due from the individual partner.