| gen. |
set-off (1) In general, the legal right to reduce the amount owed by one party to another party by the sum that the second party also owes to the first party. 2) The confiscation of a deposits held by a borrower to offset some or all of the amounts owed by the depositor the depository institution for defaulted loans. A common law right that is usually blocked or reversed by a bankruptcy court. American Banker Glossary. An agreement between the parties involved to set off one debt against another or one loss against a gain. A banker is empowered to set off a credit balance on one account against a debit balance on another if the accounts are in the same name and in the same currency. It is usual, in these circumstances, for the bank to issue a letter of set-off, which the customer countersigns to indicate agreement. A letter of set-off is also needed if the accounts are not in the same name, e. g. differently named companies in the same group. OB&M Alexander Demidov) |
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