Banker's Lien Law and Legal Definition

Banker’s lien is an enforceable right of a bank to hold in its possession any money or property belonging to a customer and to apply it to the repayment of any outstanding debt owed to the bank, provided that, to the bank's knowledge, such property is not part of a trust fund or is not already burdened with other debts. Banker’s lien is both a possessory lien and a special lien. The bank has the right to seize and sell the defaulting borrower’s property in its possession, after giving a reasonable notice but without going through the foreclosure procedure. Enforcement of a banker’s lien, however, may depend on the type of the property and the reason it was handed over to the bank. Bills of exchange, credit-cash balance, negotiable securities and promissory notes may be claimed under this lien. However, the borrower’s property handed over to the bank for a specific purpose, such as for safe custody for sale through a department of the bank cannot be claimed under banker’s lien.