What are the rules/condition/formalities for exercising the right of “Set-Off” by Banker?

Answer:

a)  Mutual debts must be certain: Before exercising  right of set off the claim and the counter claim must be determined accurately.

b)  Debts must be due: Only those  debts which are due and revocable on the date of set off can be the subject of set off.

c)  Debts in the same right: The loan account and the deposit account which will be appropriated must be in the same right.

d)  No agreement to the contrary: The right of set off can not be exercised if there is  any agreement between Banker & Borrower to the contrary of set off.

e)   Notice of set off: Before exercising right of set off Banker’s should serve notice of set off to the borrower before reasonable time.