BANKING AFFAIRS

Detailed explanation-1: -Banker’s discretion. 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-2: -The banker can exercise his right of lien on all goods and securities entrusted to him in the capacity as a banker. The Banker cannot exercise his right of lien in respect of : the goods and securities entrusted to him as a trustee or an agent; and. the goods and securities entrusted to him for some specific purpose.

Detailed explanation-3: -There is a distinction between a banker’s lien and the bank’s right to set-off. A lien is confined to securities and property in bank’s custody. Set-off is in relation to money and may arise from a contract or from mercantile usage or by operation of law.

Detailed explanation-4: -A set-off clause is a legal clause that gives a lender the authority to seize a debtor’s deposits when they default on a loan. A set-off clause can also refer to a settlement of mutual debt between a creditor and a debtor through offsetting transaction claims.

Detailed explanation-5: -Generally, a bank may take money from your deposit account to make a payment on a separate debt that you owe to the bank, such as a car loan, if you are not paying that loan on time and the terms of your contract(s) with the bank allow it. This is called the right of offset.