DEFINITION of Liability Ledger

A liability ledger is a bank’s principal book or information file, containing a comprehensive list of its loans and borrower discounts, and when they were opened and closed. These loans constitute the majority of a bank's earning assets.

BREAKING DOWN Liability Ledger

The liability ledger can be subordinate to a bank's general ledger accounting system that is stored on a computer and which represents the five main account types: assets, liabilities, income, expenses and capital.

The liability ledger is stored in the bank's loan department. If it is not computerized, then it is stored on individual ledger cards for each customer. However, this practice has become largely obsolete.