A Bank Authorization Letter is an official document written by an account holder to a bank manager to delegate authority or consent that their business partners or family members can conduct transactions in the account on their behalf.
Various reasons may prompt an account holder to write a bank authorization letter. For example, the account holder must write the bank authorization letter when they want to provide a third party with their bank statements. The bank statements summarize all financial transactions executed by the account holder and should, therefore, only be released to a credible person. A bank authorization letter may also be written if the account holder wishes to close their account. This enables the bank to start the closing process as stated by the third party acting on behalf of the account holder.
An account holder should also write a bank authorization letter if they wish to add or change nominees to their account. The authorized party will be permitted to add or change the nominee on behalf of the account holder. The letter can also be written if the account holder wants to change their bank branch. The letter should be sent to the current branch to instruct the manager to transfer the account on the account holder’s behalf. Finally, an account holder can also write the bank authorization letter to activate their frozen account. The authorized party will activate the frozen account on the account holder’s behalf.
Parties Involved in a Bank Authorization Process
When writing a bank authorization letter, the account holder must mention all involved parties. A party is an individual or entity involved in the bank authorization process. Stating the parties involved will help prevent misunderstandings and confusion.
The bank authorization letter should mention the following three parties:
First-party: granting authority
The first party is the person or group that permits access to their account to someone else (third party). The person granting authority (account holder) must write and send the bank authorization letter to the financial institution/bank. In addition, the first party must explain the rights that the third party may exercise.
Second-party: financial institution
The second party is usually the bank or financial institution that is holding the first party’s account. The bank authorization letter is addressed to the second party. The second party receives the first party’s request to grant access to the bank account to the stated third party.
Third-party: the person receiving the authority
The third-party refers to the individual or group receiving authorization by the first party/account holder to conduct transactions on their behalf. The third party is answerable to the first party. The first party will be held responsible for the activities of the account by the bank. The third-party can only conduct the specific transactions authorized by the account holder.
How to Write a Bank Authorization Letter
The bank account holder must ensure that the bank authorization letter contains relevant information. The information contained in the bank authorization letter will ensure that the account holder can effectively communicate the authorization granted to the third party.
When writing a bank authorization letter, the account holder must include the following components:
Your name and address
First, the account holder must provide their name and address. This will ensure that the recipient can identify who the writer is. This will also provide the recipient with an address they can use to respond to the letter.
Date and time of authorization
Secondly, the specific date and time of authorization must be written to avoid future difficulties. It also ensures that the account holder is fully aware of when authorization was granted to the third party. It is also important that the writer ensures that the year is fully written to enhance clarity, for example, 2021, not 21.
Recipient’s name and address
Thirdly the bank name and address must be provided in the bank authorization letter. This will ensure that the appropriate bank branch receives the letter. The recipient’s name, who is often the bank manager, should also be written in the salutation. If the account holder is not sure of the recipient’s name, they can use the generic term ‘To Whom It May Concern’ to help avoid confusion.
Your bank account details
Next, the account holder should provide their bank details in the introductory sentence of the bank authorization letter. This will help show that they are an account holder with the bank. It will also help the bank manager identify the account holder’s bank account.
State your reason for authorization
The account holder should follow up by providing a reason for the authorization. The main reasons often provided can range from medical problems, legal bindings to financial issues. The account holder should ensure that the reason provided is detailed and specific.
The bank authorization letter should then contain the transactions the account holder has authorized the third party to make. The account holder should ensure that they write the exact explicit responsibilities granted to the third party. The responsibilities stated can include withdrawals, deposits, loan settlements, etc. This will ensure that the bank can inform the account holder if the third party performs any transactions they have not been authorized to conduct.
Unauthorized transactions (fixed deposits, etc.)
The account holder must also ensure that the bank authorization letter states all unauthorized transactions that the third party cannot conduct. These can be stated as restricted transactions, which may include fixed deposits etc. This ensures that the third party cannot act beyond the rights granted by the first party.
Start date and end date
The account holder should not neglect to include the permission period the third party has been granted in the bank authorization letter. This should be indicated in the form of a start date and end date. This will ensure that the bank can halt any transaction made after the lapsing of the period stated by the account holder.
Finally, the account holder should conclude the bank authorization letter by politely requesting the bank manager to carry out the activities stipulated in the bank account authorization letter. The account holder must also ensure that they provide the following information in the conclusion:
- Contact information: The account holder should provide their contact information to ensure that the bank manager can contact them for any questions or clarification that need to be made and also if any issues regarding the authorization process arise.
- Your name: The account holder’s name must also be included when signing off. This will help ensure that the bank manager remembers who the account holder is. It also ensures that the account holder adheres to the formal format of the letter.
- Signatures: The bank authorization letter should be presented to a notary where that signing can be witnessed. This will ensure that a certified notary public authenticates the letter. It will also help prove that the account holder made a sound decision to authorize access to their account to a third party.
[Account holder’s Name]
[City, State Zip Code]
[City, State Zip Code]
Dear [Recipient’s name],
I am writing this formal authorization for [name of the third party] to access my account number[provide account number] with [bank name].[Name of the third party] is authorized to conduct transactions on my behalf that include[authorized transactions] but excluding [unauthorized transactions]. This authorization has been granted due to[state reason for granting authorization].
The permission granted to [third parties full name and address] will commence from[start date]to [end date]. Therefore, please fulfill the authorization as soon as possible. For any questions or clarifications, you can contact me at[provide phone number].
[Account holder’s name]
Sample Bank Authorization Letters
Following are some samples of bank authorization letters given:
Authorization letter for account transfer
122 Main Street
Los Angeles, CA 904239
April 22, 2020
345 Maples St
Los Angeles, CA 97686
Dear Mrs. Drew,
I am writing this letter to formally authorize Eric McCain to access my account number 1563727 with Wellington Bank. The authorization has been granted due to professional travel. Eric is authorized to deposit cash, make withdrawals and facilitate loan settlements. He is, however, restricted from accessing my safety deposit box.
The authorization granted to Eric McCain at 354Belview Rd Los Angeles, CA 46587 will only commence from May 3, 2020, to January 6, 2021. Therefore, I request you to kindly start the authorization process as soon as possible. You can contact me at 555-234-2572.
Authorization letter for bank account verification
234 Conwell St
New York, NY 2456
February 5, 2020
123 Jones Street
New York, NY 4347
Dear Mr. Simons,
This is concerning the savings account I want to open in your bank. Unfortunately, I am currently ill and preparing for surgery; therefore, I cannot physically present myself to your branch to open the account. Instead, I have authorized my brother David Michaels to submit my documents for verification.
I have authenticated the documents myself with a signature. You can verify the documents and open my account. James is, however, restricted from carrying out any transactions. Please email me at [email protected] for any questions or clarifications.
Sample authorization letter for bank statement
3rd October 2020
The Branch Manager
This letter is to inform you that I have a checking account of 873836836 in your branch. I would like the account statement at regular intervals to keep a check on my account activities, but my health is deteriorating fast day by day due to which I will be unable to visit your branch. For this, I have authorized my daughter, Irene King, to collect the account statement. I do not object if my daughter collects the statement on my behalf.
Kindly take the necessary action as early as possible. I would be delighted and grateful to you for your assistance in this case.
Sample bank authorization letter for account closure
3rd October 2020
The Branch Manager
Subject: Authorization for Account Closure
I would like to inform you that I have had an account with your bank for 4 years with account number 3653363. Now, I am not able to continue transacting in that account as it was a salary account, and I was laid off three months ago. I would like to return all the items, including the checkbook, ATM card, and passbook.
It’s my humble request to transfer the balance to another account through a demand draft. Since I am not available as of now, I have authorized Janet Jackson to oversee the transaction. Kindly accord her the necessary help she needs to make the transaction a success.
Sample authorization letter for operating bank account
This is to notify you of a very crucial matter that I currently have a savings account 3653637 in your bank; due to unavoidable circumstances, I won’t be able to conduct any transactions. I have authorized my brother, Mohammed Salim, and my business partner Rashid Abdallah to operate the account on my behalf.
I have given them the checkbook along with the ATM card. I kindly request you to allow them to conduct any transactions. Kindly contact me should you have any questions about the same.
Sample authorization letter to change nominee
With regards, I would like to inform you that I have an account on 37537373 in your branch. My daughter Sarah is the nominee for this account since the time of opening. I want to change the nominee to be my mother, Racheal. I have attached an Id proof of Rachael to prove her identity and address.
Therefore, I kindly request that you change the nomination and add my mother as the nominee. I will be pleased with your service.
Free Downloads (Examples & Samples)
Following are some free downloadable templates:
Tips for Writing a Bank Authorization Letter
A well-drafted bank authorization letter should be effectively drafted to ensure information is appropriately conveyed to the bank manager.
It is therefore critical that the account holder considers the following tips when drafting a bank authorization letter:
The tone of the letter
The bank authorization letter is regarded as a business letter. Therefore, using the appropriate tone is essential as it reflects the relationship between the account holder and the bank manager. The appropriate tone in a bank authorization letter can be achieved through thoughtful, direct, and respectful use of words and sentences.
Keep the letter precise and short
The account holder should ensure that the information provided in the bank authorization letter is short and precise. This will help save the bank manager’s time, who is likely busy. It will also reduce the chances of misunderstanding, which often results from lengthy letters.
Keep the letter formal
As a formal document, the bank authorization document should be typed and not hand-written. A hand-written letter can be illegible, resulting in difficulty in understanding the information written by the account holder; therefore, banks do not accept a hand-written bank authorization letter. The account should also ensure that the letter is correctly formatted with no spelling or grammatical errors.
Be clear when specifying the duties
There should be clarity in the specified duties of the third party. The specificity of the duties authorized and unauthorized by the account holder will enable the bank to discern what the third party can and cannot do. It also helps ensure that the bank can secure the first party’s account.
A well-written bank authorization letter should effectively communicate an account holder’s authorization to have their account handled by a third party. The account holder should ensure that the bank authorization letter is short, direct, and clear to avoid misunderstandings with the bank. The letter should contain authorized and unauthorized transactions, the account holder’s account details, and a reason for the authorization to ensure that adequate information is provided to the bank.