Banking · Right of Set-off Conditions
A Judgment Creditor argues that a set-off against Current Account X was invalid because the Overdraft Account Y was simply irregular and not formally recalled on the date the Garnishee Order (GO) was served. Which key legal condition validates the bank's decision to exercise the Right of Set-off?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1The OD account must be declared NPA for the set-off right to be exercisable.
- 2The bank must have issued a formal notice of set-off to the customer before the GO was received.
- 3The fact that the OD account was irregular means the debt was legally 'due' and payable, allowing the bank to invoke the contractual right of set-off immediately.✓
- 4The set-off is only valid if the GO was for a smaller amount than the OD debit balance.
Correct answer
The fact that the OD account was irregular means the debt was legally 'due' and payable, allowing the bank to invoke the contractual right of set-off immediately.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Banking?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Right of Set-off Conditions MCQs →Want more practice questions on Right of Set-off Conditions?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Banking · Right of Set-off Conditions