Legal Consequences of Insufficient Funds on Customers’ Bank Accounts

Abstract

The paper discusses three consequences that can occur if there are insufficient funds in the customers’ bank accounts. The first consequence — the order is sent to the file of unpaid bills and there it is waiting for a sufficient amount of money to be credited to the account (file number 2) — has contradictions in legislation that go unnoticed and pass from old acts to new ones without being resolved. One of these contradictions is shown in Regulation No. 762, adopted in 2021 that provides for various consequences of insufficient funds in the account, depending on the subject composition of customers. All customers are divided into two groups. For individual clients, the rules on the order of payments do not apply and their orders are not accepted for execution. Orders of customers — legal entities, individual entrepreneurs or individuals engaged in private practice in accordance with the procedure established by the legislation of the Russian Federation — are not accepted by the bank for execution and are returned (with some exceptions). This contradicts Article 855 of the Civil Code of the Russian Federation, which establishes uniform rules for all subjects of civil law. In addition, the exceptions listed in Regulation No. 762 almost completely coincide with Article 855 of the Civil Code of the Russian Federation, which makes the relevant provisions of this Provision meaningless. Contradictions are also expressed in the fact that in some regulations the concepts of «order» and «payment order» are confused and replaced. The paper also analyzes the types of orders mentioned in the acts under consideration. The second consequence of insufficient funds in the account constitutes a long-known overdraft. The third consequence forms the borrowing of funds from other accounts included in the group of bank accounts. The latter is a novelty for Russian legislation and, despite numerous advantages, it does not yet have sufficient legal regulation.