Hello sir,
Thankyou for your question.
To undersand this you first need to understand -
1)What is lien amount?
A lien means putting a lock. So, the lien amount is the amount which the bank has put a hold on. That amount is frozen, and you can’t withdraw those funds or use them until the lien is removed.
The bank may put a lien on a specific amount in an account, or on the entire account.
2) When does the bank place a lien?
a) Non-compliance of minimum balance requirements –
Most bank accounts have minimum balance requirements. Banks charge a penalty for non-compliance of them. If your account balance is lower than the minimum balance required, the bank will charge you the penalty and automatically deduct the charge from your account. But if your account doesn’t have sufficient balance to cover the penalty, the bank will place a lien on your account of that much amount.
b) Fixed Deposits as security for loans –
If you have offered your term deposits/ FDs as security against a loan, they are marked as lien and you can’t withdraw them.
c) Bounced/non-payment of loan EMI –
If you default on a loan payment, the bank may place a lien on your account of that amount.
Most banks have the right to place a lien on accounts held by them. So, if you default on one payment, they can put a lien on funds in your other account in the same bank.
d) Problem with cheque or draft deposited by you –
If there is an issue with a cheque or draft on your account, the bank may put a lien of that amount until resolved.
e) Suspicion of unlawful activity –
The bank may freeze your whole account in such a case. Or may put a lien on a specific amount. An example of this is non-payment of taxes.
f) Error generated by bank software –
This does happen sometimes. You need not worry, it can be resolved.
Note –You can also mark a lien on your account. You may mark a lien to set a limit for your trading account. Or you can mark a lien at the time of subscribing for an IPO. That is to make sure that you have enough funds available if you get allotted that IPO.
3) you can not withdraw the lien amount until the dues are settled. If one draws a cheque, the cheque will bounce.
4) How to resolve the lien amount?
After a bank marks a lien amount, you can put the required balance in the account. Once you settle the liabilities, the bank will lift the lien. After settling the lien, you can use the additional funds in your account.
If you don’t settle the liabilities for which the lien is put, the lien amount is used to settle them.
The best way to resolve any problem of lien amount is to go to your home branch and ask them what to do. If you can’t go the branch, you can call the bank’s customer care.
Sometimes the bank may place the lien on behalf of a third party to whom you owe money (lien-holder). In such a case, the bank will place the lien for a few days for you to go to the court and resolve the issue. If you don’t take any action, or the court rules against you, the bank will give the lien amount to the lien-holder.
In case of lien placed on FDs against loans, the lien will remain until the loan is repaid.
5) How to get back the lien amount?
If you feel that the bank has put the lien due to any error, go to the bank and ask them about it. The bank will then resolve the issue and remove the lien. But in your case, since you are aware of the reason for the lien, you can go to the bank and negotiate a time period for you to pay it back.
Hope this helps you and things workout well for you!
Regards,
Raksha
