Authorization Letter Samples for Bank

Bank Authorization

A bank authorization letter is a written consent sent to a bank manager by an account holder, to allow their business partners, friends and family to conduct transactions in the account.

In relation to bank authorization, a party may be described as someone who may have various rights to act on a bank account. Various parties in bank authorization include an account holder, the bank itself, and the person or group of people given the authority to access an account.

You cannot complete your banking formalities for various reasons. You have the option of giving a power of attorney to a trusted person to act legally on your behalf and complete your banking formalities for you. You must indicate your personal information in the letter and then indicate the surnames, forenames and addresses of the proxy holder (s). Attached to your letter must be a photocopy of both sides of the identity cards of the two persons concerned by the power of attorney for banking. The sending of your mail should be addressed to your bank branch, for your banker, by registered mail with acknowledgement of receipt. 

Also Known as: authorization letter to access bank account, authorization letter for bank withdrawal, authorization letter to bank for banking transaction, proxy authorization letter.

Parties Involved in a Bank Authorization Process

Typically, there are three parties involved in the bank authorization process. The first party is the one who is granting access to their account, the second party is normally the bank, and the third party is the individual or group being granted the authority to act on the account.

First party

The first party in a bank authorization is a person or group that gives authority for their accounts to be accessed by a third party. The first party sends a letter to the second party requesting that the third party accesses their accounts. One should explain in the authorization letter, the rights that a third party may exercise.

Second-party

Usually, the second party is the bank institution that the first party has an account with. When the first party who is the account holder intends to grant permission to a third party to carry out transactions on their behalf, they are expected to express their permit through an authorization letter sent to the bank.

Third-party

The third party in a bank authorization letter refers to the individual or group granted full consent by the account holder (first-party), to carry out transactions on their accounts. The first party is held liable by the bank (second party) for the actions of the third party whom they have allowed to act on the account on their behalf.

Purposes of Bank Authorization Letters

An account holder may be prompted to send their bank an authorization letter as proof of their agreement to allow a particular stated individual or group to conduct transactions in the account. Some common reasons that require the account holder to write the authorization letter may include:

  • An account holder must write an authorization letter when one wants the bank to give someone else their account statements.
  • One should write an authorization letter to the bank if they wish to close their account, to enable the bank to initiate the closing process.
  • An account holder should write an authorization letter if they wish to add or change nominees to their account.
  • If one wants to change their bank branch, the account holder should then send an authorization letter to their current branch to instruct them to conduct the account transfer.
  • An account holder can activate their frozen account by sending an authorization letter to the bank to activate the account.

How to Write a Bank Authorization Letter

A bank authorization letter is usually written by the first party (bank’s client) and is expected to clearly define the party being authorized to carry out transactions on their behalf and/or operate the account for other purposes. The writer should also indicate in the letter that they fully consent with the third party for writing down signatures on their behalf.

Authorized person’s name

The first party should write the official name of the authorized person on a bank authorization letter. The name should coincide with the name written in the person’s identity document, be it their Passport or ID. For example,

I (name of the first party or account holder) authorize (name of the third party or authorized party) to access my account…….

Identity documents

The authorized person’s identity documents i.e a copy of their passport and ID should be attached to the letter. The first party should also clearly state the authorized person’s ID and passport number in the letter.

For example,

Identity Document: (Passport number)

Identity Document Number: (ID number)

Authorized person’s signature

A sample of the authorized person’s signature should be attached to the letter for official verification during transactions.

For example,

Authorized person’s signature: ____________________

Authorized transactions (withdrawals, deposits, loan settlements, etc.)

When drafting an authorization letter, one must make sure that they write about the exact and explicit responsibilities that they are granting to the other party in the document.

For example,

I give full consent to (authorized person) to (state type of transaction. Deposits, withdrawals, among others).

Unauthorized transactions (fixed deposits, etc.)

In the bank authorization letter, an account holder should state all transactions that the third party, who is granted access to the account, should not perform. All restricted transactions by the first party are considered unauthorized transactions by the bank, ensuring that the third party does not act beyond their rights.  

For example,

However, I don’t permit (authorized person) to access my (loan statements, fixed deposits, or transfer funds beyond $1000, etc.)

Start date

The first party should never forget to include the period of the permission of their authorization to a third party in the bank authorization letter. They should provide the start and end dates of this permission in their writing. 

For example,

This takes effect starting from; (state the start date).

End date

The first party should never forget to include the period of the permission of their authorization to a third party in the written grant agreement. they should provide the start and the end dates of this permission in their writing. 

For example,

The authorized party can only handle my accounts until (state the end date).

Signature

The first party should include a place section at the end of the bank authorization letter for their signature. They may sign the letter after printing it or by scanning and inserting their signature into the document.

For example,

Yours sincerely,

(Signature]

Tips for Writing a Bank Authorization Letter

Specific criteria may be followed to ensure that one drafts a reasonable and good bank authorization letter. Below is a discussion of some essential tips to be considered while writing these letters.

Step 1: Keep the letter precise and short

An authorization letter for a bank should be short and precise, stating the reason for writing the letter and the authorization details of the person allowed to access the accounts. It is because there is limited time for bank agents to spend reading and approving such letters. It is possible to prevent misunderstandings that may result from a lengthy letter by following this tip.

Step 2: Specify the duties of the responsible person

To ensure security when handing over account access rights, one must clearly state the rights, duties, and responsibilities allowed to the third party in the bank authorization letter. Preferably, these duties permitted to the third party should be highlighted in the first paragraph of the bank authorization letter so that it is the first thing the bank grasps when reading the letter.

Step 3: Provide time duration/dates of authorization

The bank authorization letter must include the period within which the third party is permitted access to one’s account, stating the start date and the end date. It notifies the bank that any transactions the third party may attempt to conduct on the account before the start date or after the end date would be considered malicious or unauthorized. 

Step 4: Provide proper reason for authorization

When drafting such a letter, it is necessary to give precise justifications for the permission. It is usually preferable to provide a sufficiently comprehensive explanation to prevent any misunderstandings. There may be numerous reasons for this, such as illness, travel, and various other factors.

Step 5: Describe restrictions

 The account holder must clearly explain in the bank authorization letter the parts of unauthorized or restricted transactions to the third party. This directs the bank to deny access to the third party if they attempt to act on the mentioned restricted transactions.

Step 6: End with a proper conclusion

The bank authorization letter should end with a formal conclusion like “yours truthfully”, followed by the name and a signature of the first party.

Sample Letters & Examples

SUBJECT: Application for Power of Attorney for Bank Proxy

Dear Sir/Madam

I, the undersigned NAME FIRST NAME, domiciled at the POST ADDRESS and holder of bank account number XXX, domiciled in your bank branch, gives a power of attorney to NAME on this bank account and authorizes him/her to carry out all transactions on this bank account from [Date] to [Date]. I would like to thank you in advance, and I would ask you to assist, Sir/Madam, in the assurance of my highest consideration.

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    Example of a Bank Authorization Letter

    (Writers name)

    (Writers address)

    (Location)

    (Contact)

    To

    (Recipient)

    (Recipient address)

    (Location)

    (Subject matter)

    Respected Sir/ Madam,

    I (first party’s name) give full consent to (authorized person or name of the third party) to take charge and act on my behalf with regards to transactions under account (account number) with (bank name) bank. I give full authorization for the following transactions (loans, deposits) but excluding some transactions (state unauthorized transactions). This permission is granted from (start date) to (end-date). For verification purposes, details about the authorized person are stated below;

    Authorized person’s name

    ID number of the authorized person

    Passport number of the authorized person

    Sincerely yours,

    First Party’s Name

    Signature

    Conclusion

    Authorization letter samples for banks involve three significant parties the first, second, and third party. The authorization letter aims to instruct the second party, who is the bank, to permit the third party to make transactions on the account following the stipulated guidelines of the account holder.

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