Bankers lien

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Bankers lien
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Banker's lien is much more comprehensive than an simple lien it was named implied pledge. Thus if banker's lien is treated as an implied pledge it lets him the right to disposal submit an appropriate notification and you cannot file a claim to seek the right to sell. Bank pledge is the right of the bank to perform a pledge on any property in order to secure the customer's debt [1].

Juridical definition

Juridical definition of the banker's lien on transferable securities was called as "an implied pledge." In the event of disagreement, the banker reserves the right to pledge on all accounts obtained from the customer in the normal course of banking in relation to the balance which could belong to such a client. In accordance with the mercantile custom, the banker has the general right to pledge deposited by client or on his behalf all the form of commercial papers in the normal procedure of banking business. It is worth adding that this custom do not cover all the valuables which were placed only for the safe custody purpose. The lien applies only in case of documents guaranteeing the payment of a certain sum of money which are passed to the banker from the client in order to collect it. After the assemblage the banker can use the action in order to drive down the customer's debit balance except otherwise indicated [2].

Scope of lien

A lien is the creditor's right that guarantees him that his claim will be satisfied. It is a form of insurance that guarantees extra fulfillment of the debtor's obligations towards the creditor which granted over an item of property to secure the payment of a debt or performance of some other obligation. The person which uses the pledge is called at the lien holder or lienor and the owner of the real estate that grants the pledge is referred to as lienee. A lien may be established to secure a monetary or non-monetary claim.

The banker may grant an advance to the client and require a lien guarantee from him. It may do so on the basis of a bilateral agreement, although it is not legally required to sign such a contract. However the right to lien may be expressly granted by way of a contract or may be definitely excluded by agreement between the parties or by existence of a contract or circumstances inconsistent with its performance lien's right. If the client has securities that have passed through the banker's hands A practical attempt to pledge the banker is whether they were securities received and operated by the bank in its ordinary course of business no explicit or implied agreement between the client and the bank contradictory with liens [3].

special circumstances in which the right to pledge can not be exercised

Nonetheless, in some specifics circumstances there cannot use this right of lien:

  1. If assets of exceptional value are deposited in the banker's safe custody.
  2. If the demesne or securities were submitted for a specific purpose.
  3. In the event that the money is withdraw to cover certain accepted bills payable at the banker.
  4. It also does not include ownership titles left negligently in the bank. Likewise, a pledge may not be exercised with respect to documents or valuables left unintentionally to the banker
  5. The lien cannot be performed in relation to fiduciary accounts. But the lien can be performed if the bank does not have a cognisance.

In the case of the banker's right to lien, the Law of Limitation is not valid. This Act not effect on possession which the banker has a pledge [4].


  1. Ellinger E.P., Lomnicka E., Hare C. (2011). Ellinger's Modern Banking Law (5th ed.), Oxford University Press, p.864.
  2. Gulshan S.S. (2009). Business Law, Excel Books, New Delhi, p.21.
  3. Marsden M. (1985). The Practice of Banking, Part 1, Bank of Credit and Commerce International, London, p.21.
  4. Gulshan S.S. (2009). Business Law, Excel Books, New Delhi, p.125.


Author: Klaudia Dudzik