Lien Mark

A lien is the right of a creditor in possession of goods, securities or any other assets belonging to the debtor to retain them until the debt is repaid, provided that there is no contract express or implied, to the contrary. A bankers’ lien on negotiable securities has been judicially defined as ‘an implied pledge’. Banker’s lien is a general lien recognized by law. The banker can look to his general lien as a protection against loss on loan or overdraft or other credit facility.

Once a valid lien is placed on a bank account, it is frozen. The bank is not allowed to let any money out of that account. This means that any checks written on the account that are still outstanding are going to bounce. In most cases, the lien is just the first step of the process.

Banker lien confers upon a banker the right to retain the security, in respect of general balance account. The term general balance refers to all sums presently due and payable by the customer, whether on loan or overdraft or other credit facility. In other words, the lien extends to all forms of securities deposited, which are not specifically entrusted or to be appropriated.

Nowadays, some banks offer internet facilities for funds transfer, the platform allows the customer to lien mark funds from the bank deposit account towards a broker’s trading account and trade instantly. If the customer does not use the funds for trading, the lien mark is automatically released.