Bankers Right of Set-off

1. Set-off means- that the bank can adjust the credit balance in a customer's account against a debit balance in another account maintained by the same customer.
2. In an on going, situation, the right of set-off can be exercised by a banker- by serving a reasonable notice on the customer.
3. The right of set-off can be exercised by the banker only when the relationship between the customer and the banker is that of- Debtor and Creditor.
4. The banker can exercised the right of set-off only in respect of- debts due and determined.
5. The following condition are required to be fulfilled before a banker can exercise the right of set-off-     (a)The debt must be a sum certain and due immediately, (b) The debt must be due by and to the same parties and the in the same right, (c) There should be no agreement to the contrary.
6. The right to set-off account arise immediately in the following cases- (a) On the death, metal incapacity or insolvency of a customer, (b) On the insolvency of a firm, or on the liquidation of a company, (c) On the receipt of garnishee order.
7. The right of st-off is available to the banker only in respect of- credit balance held in a customer's account.
8. In case of time barred debt- the bank can exercise the right of set-off provided the debts are due in the same sight.
9. Money held in a fixed deposit account may be set-off against an overdraft allowed to the same customer- only after the fixed deposit has matured for payment.
10. For exercising the right of set-off- no document is required to be obtained from the customer.