What does "lien amount" in the SBI mean?

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What does "lien amount" in the SBI mean?


This information is not pertaining to SBI but all the banks.

“Lien” is a concept of marking the right of third party on an account. It can be for an account as a whole or for a specific amount blocked for a specific purpose. Line marking can take place in many a form and a few are explained here below:

A. For Trading: For the purpose of trading one can mark “Lien” for a specific amount for the purpose of trading. Once you mark line the same amount will be eliminated from the effective balance of your account and actual transaction takes place once you use the line marked against trading activity. For ex. If your account balance is Rs. 50,000/- on a given date and you mark a lien of Rs.30,000/-, effective balance in your will be shown as Rs.20,000/- and later the effective balance will be decided based on your actual utilization of lien marked amount.


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B. Subscribing for an IPO: At the time of subscribing for an IPO you block a particular amount in your account also known as ASBA (Application Supported by blocked amount). The process of blocking the amount for purchasing IPO ends up marking lien in your account, so that if you get allotted that particular IPO your account should have sufficient amount.

C. Pledging of FD Receipts: As you must be aware one can use one’s FD receipts as a security by pledging to some bank, financial institution. Pledging your FD is also marking lien on your FD in the name of that particular bank so that the holder of the FD can’t withdraw the same without the prior permission of concerned banker.

To sum it all lien marking is providing rights of your account for a specific amount or not, to third party. Generally all the banks have a lien right on the account with them. It means if one commits a default in the same bank, the dues can be set off against the amount held in other account with same banker.

There is also a provision of No-LIen account with bank so that the banker doesn’t have the lien right on the same.

Hope this answer helps you.

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