A Study On Some Legal Problems Of Charge Repayment Of Commercial Bank

If a borrower fails to repay a commercial bank loans according to the borrowing contract and the borrower has the deposit account in the commercial bank,the commercial bank might directly deduct the amount from the borrower's deposit account to pay off the loan principal and interest.The behavior is called deducting for outstanding loans.Among judicial practices,the behavior of deducting for outstanding loans on the part of commercial banks is still a controversy.China's legislation has not yet provided clear and unified legal bases for judgment of the behavior.Theoretically,deducting for outstanding loans on the part of commercial banks is defined as performance of the right of offset stipulated in Article 99 and Article 100 of the Contract Law of the People's Republic of China.The author thinks the reasonability of the definition is calling for further research.The behavior of deducting for outstanding loans on the part of commercial banks has aroused many disputes.There are many legal issues regarding the behavior remaining unsettled.First,is the commercial bank executing its right of offset by deducting for outstanding loans? Second,does the commercial bank has the right of executing the right of offset? If the commercial bank has the legal right of offset,is the legal relationship of deposit a purely debtor-creditor relationship? Is the behavior of deducting for outstanding loans on the part of the commercial bank a constitutive requirement of the legal right of offset stipulated in the Contract Law? If the borrower's deposit is in foreign currency,can commercial bank deduct for outstanding loans? Under the condition of bankruptcy,what is the nature of the behavior of deducting for outstanding loans on the part of the commercial bank? What kind of limitations are facing the commercial bank? Can the settlement behavior based on the maturity acceleration clause be repealed? Can different branches under the same commercial bank mutually deduct for outstanding loans? What kind of deposit should be banned from deducting for outstanding loans on the part of the commercial bank?The major cause of the above problems is the contradiction of legal terms about commercial banks' deducting for outstanding loans under China's current legal framework.Basic laws,including Law of the People's Republic of China on Commercial Banks,establishes the principle of deposit protection,which means none units can deduct the depositor's deposit unless elsewise stipulated by laws.Lending General Principles and Guiding Opinions on Strengthening Legal Collection of Loans from Financial Institutions and Handling Non-Performing Assets issued by People's Bank of China stipulate that a commercial bank can directly deduct the amount from the borrower's deposit to pay off the loan principal and interest according to the borrowing contract.Since the issue has not yet been expressly legalized,legitimate rights and interests of the borrower and the commercial bank might be easily damaged.Therefore,it is necessary to analyze and study the legal nature of the behavior of deducting for outstanding loans so as to effectively safeguard legitimate rights and interests of both the commercial bank and the borrower.In the introduction part,the author lists five typical cases to pose the research question of this paper.In the body part,this paper discusses the behavior of deducting for outstanding loans on the part of commercial banks.Part 1 defines the research object of this paper,including commercial banks in the banking and financial system and borrowers which have deposits and borrow loans from commercial banks.Part 2 studies the legal nature of the behavior of deducting for outstanding loans on the part of commercial banks.First,the deposit and loan legal relationship is discussed.Second,the author expounds on the relationship of the behavior of deducting for outstanding loans with the legitimate offset and agreed offset.Part 3 examines legal issues arising from cases listed by the author in the introduction part,and these legal issues include whether bank deposits in foreign currency can be deducted for outstanding loans,whether deducting for outstanding loans is allowed under the condition of bankruptcy,whether different branches of the same bank can mutually deduct for outstanding loans,and under what conditions the behavior of deducting for outstanding loans should be banned.