Research On The Bank’s Legal Right Of Set-off

Bank legal offset right means when the bank and the client are in debt to each other, the bank has rights to claim that its creditor’s rights and customer’s rights are eliminated in equal. In today’s world of economic interactions, bank plays a more and more important role as major financial institutions. The realization and protection of the creditor’s rights of the bank is more about security of a country or region and stability of the financial order. And in the existing legal system framework, the offset is undoubtedly the most convenient way for banks to claims its creditor’s rights. So, putting offset system into the practical bank business is not only has the general function of debt guarantee, but also has the most important significance of protecting public interests of depositors, safeguarding stability of financial order. The paper is divided into four parts.The first part is about basic theory of bank legal offset right. The author specifically expounds the meaning and the legal nature of bank legal offset right. The author also analyzes the conflict of interest issues when bank legal offset right exercises. It’s the premise for constructing bank legal offset right from the perspective of interest balance. The second part discusses and evaluates the legal right of foreign banks offset legislation. Although the bank legal right to offset system in China has not been established, many countries have set up and tend to mature in today’s world. Some scholars discussed in the paper about foreign banks offset right system. It will do some benefits to the construction of bank legal offset right system in the future.The third part expounds the legal provisions of our bank legal offset right and the existing problems. Nowadays, the major countries in the world have regulation about bank legal offset right system. Our country has specific provision only for the general offset system, lacking of important concept and specific system design of bank legal offset right. In practice, the bank’s rights of loan and deduction behavior is regarded as the rights of bank legal offset behavior and applied more. But because there is no unified legislation, only provided in the administrative rules and judicial interpretation, with low level legislation and many contradictions, bank abuse the power and judicial organs negative the offset right of mortgage bank at any time frequently occurred.The fourth part is about to build bank offset right system of our country. The author suggest in the commercial bank law clearly gave the bank a specialized right. When the borrower don’t return due loans, bank have rights to deduce its deposition to repay the loan. The author calls it "bank legal offset rights". Concrete system design is:first to build a principle for our bank legal offset right system to follow which is keep balance of the bank, customer and interests of a third person. Second, complete bank account in China. Finally, construct restriction conditions and exercise program problem of China’s bank legal right to offset.