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University of Dhaka

Faculty of Business Studies


Course Code: MPB-401

Course Title: Banking Theory and Practice

Presentation on : Lien

Presented By :
Submitted To:
Shibli Rubayat Ul Islam Shaqif Hasan Sajib

Department of Banking and Insurance ID- 51732009


University of Dhaka

Submission date: 21.04.18


What is Lien?
 Lien is defined as the right of a creditor to retain
the possession of moveable goods and securities
owned by the debtor until the debt has been paid
in full.
 Lien
is available as bills, cheques, promissory notes,
share certificates, bonds and debentures.
 Generally,
It does not include the right of sale of
goods and securities.
 Lienis not available on deposits, since deposits are
neither good nor securities.
Advantages of Lien:
 Simple form of security.

 Security can be executed in a shorter time.

 Cheaperand less time consuming (No payment of


Stamp Duty)
Types of Lien:
 General Lien
 Banker’s Lien
 Negative Lien
 Equitable Lien
 Maritime Lien
 Particular Lien
General Lien
A general Lien gives the right to the creditor to
retain the possession till all amounts due from debtor
are paid or discharged

 This
is available to bankers, attorneys of High Court
and Policy Brokers only
Banker’s Lien
 Banker has right of general lien

 Toexercise the right of lien the bank must


lawfully take over its possession

A banker should sell the securities only after


giving a notice to the debtor
Customer’s
Application for
Loan against
Security
Front
Side

Back
Side
Delegation Authority in Bank
 Branch can grant loan up to 80% of the
instrument value under their own Delegation
Authority.

 Forloan amount beyond 80% of the instrument


value, approval from Head Office is required.
Sample copy of branch
confirmation letter
regarding lien, if loan
amount exceeds 80% of
the instrument value
Charged document/Letter
of Lien.
Through this charged
document, bank get the
legal right to set off all
liabilities held with the bank.
Notice for
Adjustment
Conditions for Exercising the Rights of Lien
 The assets over which the right is to be exercised must
be in possession of the creditor who will exercise it.

 There must be a lawful debt due to the person against


lien.

 There must not be any contract to the contrary i.e. safe


custody contract etc.
Banker does not have lien over the following items

 Credit balance of deposit account of the


borrower.
 Securities received by Bank for sale.
 Goods or securities left by the customer in the
Banker’s hands inadvertently.
 Money deposited for a special purpose.
 Instruments deposited for collection.
 Articles deposited for safe custody etc.
Thank you
Negative Lien: Banks enjoy a general lien on all securities of the borrowers until the entire bank’s
claims are satisfied. There is, however, another kind of lien which is called Negative lien. In this
case banks take a declaration from the borrower that the assets mentioned therein will be free
from any sort of charge.

Equitable Lien: An Equitable Lien is an equitable right conferred by law to a charge upon the
movable or immovable property of another until certain claim is satisfied such as, a partner who
pays partnership debts on dissolution has an equitable lien on the property of the partnership.

Maritime Lien: A Maritime Lien is a right specially binding a ship her furniture, machinery, cargo
and freight for the payment of claim based upon the maritime law. For example, the person
who has suffered losses as a result of collision due to ship's negligence has the right of lien on
ship and her belongings.

Particular Lien : In case of a particular lien the creditor gets the right to retain possessions only of
goods or securities for which the dues have arisen and not for other dues .
Example: A laptop-repairer can withhold the delivery of laptop until his charges of repairing the
watch are paid to him.

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