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Lien marking on FD without Account Holders Permission

Hi, I have a question about lien marking on Fixed Deposits.

I had created a Fixed Deposit with my bank in July 2009 for Rs 125000.00 and gave a photocopy of the FD receipt to my employer. I was travelling to the USA and my employer wanted to sign a service agreement for 1 year or Rs 125000.00. I booked this Fixed Deposit and gave a photocopy to my employer.

The bank auto-renewed this FD in July 2010 and when I wanted to liquidate in December 2010, the bank asked me to get a No Objection Certificate from the employer. They told me that there was lien marked on the fixed deposit on instructions from my employer. I had already left that compay in March 2009 and it took me 10 days to get an NOC. I needed this money urgently for some personal work which was extremely delayed because the bank refused close the FD without NOC.

I asked bank for reasons why a lien was marked on this FD without my approval. I didn't even had an idea about it. All they say is this is - the bank lien marked this FD in favor of the employer because the employer asked them to do so. And because this was my corporate salary account.

I had never signed any contract with my employer or with the bank about such lien on my fixed deposit. Moreover the bank has also failed to provide any proof of communication from the employer at the time of lien marking.

I have been following up with them for almost 5 months now they are again and again saying the same thing - that they lien marked my FD to my employer on my employers instructions without my agreement because it was a corporate account. I was never informed about this lien until I tried to liquidate the FD after 8 months since I left the company. The bank had already converted my account to a normal savings account and still they didn't bother remove this lien or inform.

I know that such unilateral iien in not legal but I couldn't link it to any law or act. I am now planning to file a case against the bank for lien marking the FD without my consent and without informing me.

To me, someone in the bank messed up with my account because of his/her friendly terms with my employer and now they are just trying to fool me by giving false reasons. Please advice of a law or act according to which this lien marking could be proved illegal. I had never signed a contract or agreemet which mentioned of a lien or Fixed Deposit or anything of that sort. The bank hasn't even been able to show me any proof of communication from the employer regarding this lien.

Any information will be much appreciated.

Thanks and Regards,



 32 Replies

Nahid (Head of Legal & Compliance)     28 May 2011

According to the standard practice of law the bank can not create lien without your consent. May be the account has opened to remit your salary but that is your own account and the company doesn't have any legal authority to create such a lien. I'm providing this comment based on your contents and I believe there is nothing hidden. You can issue show cause notice based on the ground that on which authority they have marked the lien??? I'm of the opinion that you need to show strength to the bank which will in turn provide you a fruitful result as the bank will be in legal trouble if the statement of you are true from all aspects. should you have any further query please feel free to contact with me. With my continued regards Md. Nahid Absar Emon 00-880-1730-701-875
1 Like

Kumar Doab (FIN)     28 May 2011

Learned Mr. Nahid has given valuable advice and the course of action. You should show the strenght to the erring bank.

It is believed that your representations mentioned by you and the response of the bank mentioned by you are verbal.

You can lodge  a written complaint describing your representations in chronological order with date and name of the bank employee,with BM/Nodal Officer/MD/Company Secretary of the bank and bank is under obligation to supply thier reply to you.You can submit to BM by hand under proper acknowledgment with seal and signature. Demand to supply you the name of the bank employee who has authorised the lien, and supply you the reply and copy of your consent by registered/speed post only.

Once you have a written statement and enclosures desired by you, you can take further action.

You have the option to complain to BO.

1 Like


Dear Mr Nahid and Kumar, thank you very much for your informative responses.

Here is some more information about my issue with the bank.

I have at least a dozen emails from the bank and two written letters from them. All the emails and letter state just one thing - that they marked the lien on instructions from my employer. Below is exactly what there written letter stated about the lien:

....That the fixed deposit of Rs 125000.00 was booked on July 09, 2009 and the same was lien marked to your employer based on an instructions provided to us by them, for Corporate Salary accounts. For all salary accounts opened under the corporate, lien marking is an on-going proecss. However, we regret our inability to retrieve the document based on which the lien was marked to your account....

I already raised this concern with RBI BO but I think I raised it under wrong clause. They disposed off my complaint with following reason:

....under Not on the grounds of complaint referred to in clause 8 or otherwise not in accordance with sub clause (3) of clause 9.

I have already sent an RTI application to RBI PIO seeking information on decision making procedure for this complaint and right procedure to file a fresh complaint. That will take at least 30 days.

In the meantime, I also want to file a case against the bank in Consumer Forum. I have sent them at least a dozen emails to the bank asking for lien related documents but the bank has been unable to do the same.

Though I was able to get an NOC from my past employer however it took me 10 days get my money which I urgently needed. I still want to teach a lesson to this bank for causing me lot of financial trouble and mental harrassment.

Please advice the procedure of sending a Show Cause Notice to the bank. Can I do it through Consumer Forum or do I need to open the case in some other forum of law? Is there a time frame for filing the case in Consumer Forum? The issue had started in First week of January 2011. Am I eligible for any compensation if the bank is proved guilty in the case?

Thanks and Regards


Just to add to the above, I have already escalated the issue to there head customer care and then to the CEO email address and I have been receiving emails from there customer service AVP and VP with the same corporate account thing.

prabhakar singh (advocate)     29 May 2011

Dear Nihar!

I have gone with all facts stated by you hereinabove and have also gone through with ADVISES made to you by M/s. Kumar and Nahid.

No doubt BANK has acted in highhandness as IT did not have any right to create a lien against your FD without your written consent which you say you never gave.IT lacked in its legal capacity to do so on request of any body else be it your employer or any third party,whosoever.

You have correctly doubted that it is result of colusive lisening in between BANKS and your EMPLOYERS' STAFF.

Now the QUESTION is WHAT remedy you have got against this HIGHHANDNESS of BANK???

Communications made so far with BANK is okay but  since they are defending there action, so no compensation for your financial hardship and injury may result from them.Even RBI action the type of one intiated by you, even if takenin your favour, will not result in any compensation award in your 


Ofcourse you do have two legal forums to approach and claim compensation for injury caused to you as BANK lacked  lacked  its legal capacity in creating LIEN on your FD which amounts to deficiancy of service for not encashing it on the date it was encashable making a unrightfull ground that a lien on it was created on it on representation of your employer.THIS DOES GIVES YOU A CAUSE OF ACTION AGAINST YOUR BANK.

First thing, decide in your mind the quantam of damages you want to claim on account of finanacial losses as well as on account of mental agony caused.

THEN serve a NOTICE ,email as well as a/d registered upon the BANK and its  MANAGER forwarding a copy to its head office STATING clearly facts parawise and in choronological order and asking them to pay you the quantam of damages within a reasonable period (which may be any thing 7 to 10 days here) FAILING WHICH YOU SHALL FILE A COMPLAINT FOR REDRESSAL AND RELIEF EITHER BEFORE BANKING OMBUDSMAN OR BEFORE CONSUMER FORUM COURT HAVING JURISDICTION IN THE MATTER AS PER LEGAL ADVISE AND THAT CASE BANK SHALL BE MADE LIABLE  TO PAY THE ENTIRE COSTS OF THE PRCEEDINGS THAT MAY BE INCURRED.




1 Like

Kumar Doab (FIN)     29 May 2011

You have received many emails, including emails from VP/AVP-Customer care and two letters, all of them stating lien was created on account of instructions from employer and it can be done as per their practices authorized by their HO and may be RBI.

You have the right to obtain the documents:

1. Certified copy of written communication by your employer instructing the bank to create a lien favoring them.

2. Certified copy of the form if any filled up and passed by the bank for lien.

3. Certified copy of the communication supplied to you by the bank stating the lien has been placed on your FD and POD of this letter.

4. Name department designation address of the bank official/all officials who have passed the lien on your FD.

5. Certified copy of the bank circulars authorizing the branches to create such lien.

6. Certified copy of RBI instructions/circular by which the bank have been empowered to create such a lien.

Under RTI you can ask for these. You must enclose a postage prepaid, self addressed envelope for reply to you.

You can also raise RTI application to RBI for providing them a confirmed yes or no on whether such lien can be created or not, and ask them to supply a certified copy of the circular vide which banks have been empowered to do so. You can ask whether the banks can create such a lien in the absence of any clear directions, and whether such a lien is legal or illegal. RBI reply shall be more than sufficient. You may enclose copies of your emails, and emails and letter of the banks to you.

Since you have faced difficulty/ made error you may consult an experienced lawyer who shall draft your letters.

You can also confirm from any other bank where you or your family has rapport, whether such an action is lawful and how to contest it.


Once you have specific documents you can term it as attempt to misapprpriation of your funds and initiate legal action against your employer also.

However it shall be appropriate to let your lawyer examine all docs and initiate action.

1 Like


Thank you very much for your valuable advices. I have drafted a letter will send it to the bank via registered post. I have already sent an RTI application to RBI PIO regarding the same. I will share the result here.


I have sent an application to Citibank and copy to their Chennai Head office. Below is the content of the same. I am also sending a copy to RBI Banking Ombudsman.

I will file a case in consumer court if I don't hear within 7days. Is there any law about such lien marking which I can mention in my application in consumer court?

Thank you


I hereby ask Citibank to provide following the following documents and information related to my Fixed Deposit:


1. Certified copy of original written communication by the employer instructing Citibank bank to create a lien favoring them.

2. Certified copy of the communication supplied to me by Citibank stating the lien has been placed on the FD and proof of delivery of this letter.

3. Name, Department, Designation and Address of the bank official or all officials who have passed the lien on my FD.

4. Certified copy of the Citibank circulars authorizing the branches to create such lien without written consent from the Account Holder.

5. Certified copy of RBI instructions/circular by which Citibank has been empowered to create such a lien without account holder’s consent.

6. Certified copy of the application form I had submitted to book this Fixed Deposit.

7. Certified copy of the corporate salary account agreement which enables bank to create such a lien on salary accounts without account holder’s consent.

8. With reference to the employer’s letter dated April 8, 2011 (which Citibank provided as enclosure with letter dated May 19, 2011), please provide me a certified copy of the contractual obligation, under which according to the employer, the lien was marked in their favor.


Please send the above documents and information within 7 working days upon receipt of this letter.


Kumar Doab (FIN)     02 June 2011

In your earlier posts you had not described the point number 8.

Point number 7: banks are under obligation to supply the certified copy of all documents and forms filled by the customers, then and there when these are submitted.

Copy of the contractual obligation mentioned by you is believed to be between you and the company and if it is, then you are supposed to have a copy. Please clarify it is appointment letter or some other document.

Or was it the service agreement signed by you and was it mentioned in this contractual agreement that you give the rights to create a lien on a deposit/FD in favor of the employer and was it also mentioned that lien shall be for 1 year after 1 year company shall vacate the lien. If it was as per the service contract and was described in the service contract then it is altogether different scene. However the relevant documents shall clarify.

Surprisingly you have not made the company a party and has not demanded the relevant documents on the strength of which they have created a lien on your personal FD.

You have mentioned that bank has written to you: "However, we regret our inability to retrieve the document based on which the lien was marked to your account....". You may immediately ask to supply these documents under RTI form PIO/CPIO of the bank, and do not forget to enclose postage pre paid self addressed envelope for reply by regd. post, and mention in your application that envelope is enclosed for reply by regd. post.

You may enclose this letter with your complaint under RTI to RBI and ask them vide which rule and law of the land bank can decline to supply the document based on which the lien was marked to your account. And does the action of the bank confirms to the rules set by RBI or is in contradiction and ask the RBI to supply concerned rules.

1 Like


Thank you for the information regarding Point no 7.

The contractual obligation (point no 8) is the service agreement I had with my employer, that service agreement was for one year and it expired on Sepetember 17, 2009. I still have a copy of the same and it doesn't have any mention of lien marking on FD.

I am not making the employer a party because I am not sure if I can make them a party while filing a case in consumer court. Also I believe it was Citibank's resposibility to verify that employer does actually have my written consent before marking a lien in favor of them. I have sent an RTI application to RBI and an application to Citibank, and if I don't get appropriate response for Citibank, I will go to consumer court against the bank.

prabhakar singh (advocate)     03 June 2011

you are correct ,Do not make party to employer.There should have been a try party agreement between you,the bank,and employer to validate a thing like this.Even if there is a practice on the part of the bank,in the name of any circular from their head office or even from Reserve Bank,the same is an excess.Power to regulate business of banking can not justify this kind of action.Any circular of such a kind should be treated illegal.

1 Like


Thank you Sir.

Is there a law or an act or an RBI circular which I can mention in complaint in consumer forum?

prabhakar singh (advocate)     03 June 2011

For you it is sufficient to prove that you were owner of fd. It isthier burden to discharge that they had some legal authority to do so.

1 Like

RAJU O.F., (Advocate)     06 June 2011

In your first query dt.28-05-2011 you have stated that you had deposited 1,25,000/- in JULY 2009 and had given copy of the FD receipt to the employer.  What was the purpose of giving the copy of this FD receipt.  I presume that there might be condition to execute a bond for a specified period for a sum of Rs.1,25,000/- and their security a deposit for the said amount was made in your name.  In the said query itself, you have state that you had left that company in MARCH 2009, which seems to be inconsistent. Or is it typographical error of the year?

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