Discuss the implication of the Limitation Act, 1963 on the rights of bankers and remedy available to a banker when limitation sets in.

The Limitation Act was enacted in 1963 with the intention of protecting borrowers and preventing lenders from misusing their position and acquiring assets of the borrower after a very long period of silence. The Act specifies that if debt is not acknowledged within a time prescribed under the Act, it gets time barred. The provisions of the Limitation Act are also applicable to the Banking transactions and thus, the Banker has to ensure that the documents remain valid and are not time Barred. The limitation period for different type of documents as prescribed under Limitation Act are given under: S.No Type of Document Limitation Period 1 Demand promissory Note 3 years from the date of the note 2 Bill of exchange payable at site or on presentation 3 Years from the date of presentation 3 Usance Bill of exchange 3 years from the due date 4 Clean loans 3 years from the date of the loan 5 Guarantee 3 Years from the date of invocation of the guarantee 6 Mortgage-Payment 12 years from the date the money sued becomes due 7 Mortgage-foreclosure 12 Years from the money secured by the mortgage becomes due 8 Mortgage-Possession of immoveable property 30 Years when the mortgagee becomes entitled for possession 9 Letter of credit 3 years from the date of payment of the amount of bills under the letter of credit From the above, it is clear that the banker should recover the due amount within the limitation period. In case, they are unable to do so they should file a suit for recovery within the period. Banks are expected to hold valid legal documents as per the provisions of the Limitation Act. If the limitation period expires, then the bank should arrange to obtain fresh set of documents. A limitation period can be extended in the following manners. Acknowledgement of debt Part payment Fresh set of documents