Lien

Indian Contract Act, 1872 — Section 171

The right of a creditor to retain possession of a debtor's property until a debt is paid. A banker's lien (under Section 171 of the Indian Contract Act) is a general lien — it allows a bank to retain securities deposited with it for any dues owed by the customer, not just dues linked to the specific deposit. Distinguished from a pledge (specific) and mortgage (registered security on immovable property).

In practice, a banker's lien is the quiet, self-help security a bank already holds without any fresh document. Under Section 171 of the Indian Contract Act, 1872, a banker's general lien lets the bank retain securities and instruments that have come into its hands in the ordinary course for any amount the customer owes — not merely dues tied to the specific item. In recovery, this means a bank can hold on to deposited securities, drafts or instruments and set them off against an outstanding loan, often before formal SARFAESI or DRT steps begin. The limits matter: the lien attaches only to property received as banker, not to items entrusted for a specific purpose inconsistent with a lien, and it differs from a pledge (specific possession) and a registered mortgage (immovable property). Mis-asserting a lien over earmarked funds can expose the bank to a wrongful-retention claim. Banks confirm the items truly fall within the general lien before exercising it.