Bank transactions are very sensitive, and it is always advisable to complete them yourself. Sometimes, however, circumstances may force you to relegate these duties to another party. This party must be someone you trust and that you can convince your bank to trust. Essentially, you do this by sending an authorization letter for bank expressing your consent. Let’s take a closer look at this letter.
What Is an Authorization Letter for the Bank?
Also called a proxy authorization letter, an authorization letter for the bank is a formal document sent to a financial institution by an account holder consenting to another party to conduct transactions on their account. This party could be a business partner, attorney, friend, or family.
Parties Involved in the Bank Authorization
When it comes to bank authorization, there are three parties involved who are described by the kind of rights they have to act on a bank account. These parties include:
- First Party: This is the account holder and the one with the most rights to the account. The first party is also the person that gives authorization for their account to be accessed by another party by sending a letter to the second party.
- Second Party: The second party is the financial institution in charge of the first party’s account. It is usually a bank and the recipient of the first party’s authorization letter with the power to grant the third-party permission to access the account.
- Third Party: The third party is a group or individual granted access to the first party’s account to conduct transactions on their behalf.
When the authorization is granted, the third party will hold the first party liable for any actions the third party performs on the account during the authorization period.
When to Use a Bank Authorization Letter
There are several situations that may prompt you to grant another party access to your bank account. Common examples include:
- You want them to fetch your bank statements for you.
- You want to change or add nominees to your account.
- You want them to make some payments in your absence.
- You are temporarily unable to access your account, either due to being ill or out of the country.
How to Write a Bank Authorization Letter
Basically, a bank authorization letter should identify the third party and define the transactions they can complete on behalf of the first party. It should express full and willing consent from the first party, enough to convince the second party to grant the authorizations. Here is how to write it:
Step 1: Identify The Third Party
Write down your name and address at the top of the page, followed by the date and bank’s address. You should always address your authorization letter to the bank manager. Once the addresses are in place, begin your letter by identifying yourself by your full name and account number. Explain that you are writing to grant a third party access to your account and name the third party. You can also explain how you and the third party are related.
Step 2: Define the Responsibilities
Define exactly what kind of access the third party will have to your account, including what they can and cannot do on your behalf. This will ensure the third party does not exceed their rights.
Step 3: Justify the Authorization
Give a reason for why you are giving the authorization to the third party, including why you are unable to complete the transactions yourself. Common reasons include travel, illness, other commitments, etc.
Step 4: Add the Third Party’s Signature
Introduce an identification section for the third party, which the bank will use for verification and reference. Include their full name, identification details, and signature.
Step 5: Define a Validity Period
Set the start and end date for when the authorization will be valid. Leaving the permission open-ended could give the third-party unlimited access to your account.
Step 6: Add the First Party’s Signature
Read everything you have written, confirming it is correct, then sign the letter.
Bank Authorization Letter Template
[Your Name]
[Your Address]
[State, City, Zip Code]
[Your Contact Information, i.e., phone number, email address]
[Date]
[Bank Manager’s Name]
[Bank/Branch Name]
[Bank Address]
Re: Authorization Letter
Dear [Bank Manager’s Name],
I, [your name], the account holder of the account [account number], hereby authorize [third party’s name] to make transactions on my bank account, including [define the extent of rights, e.g., loan settlements, deposits, withdrawals], but excluding [set limits for the rights].
[Third party’s name] may perform all related actions and sign all the required documents within the scope defined in this authorization letter. Below, I have provided proof of their identity and signature for your verification and reference purposes:
Authorized Person: [Third Party’s Name]
Identity Document: [Passport/National ID, Driver’s License, etc.]
Identity Document Number: [Passport No., ID No, etc.]
Authorized Person’s Signature: [Third Party’s Signature]
The authorization granted to [third party’s name] will be valid from [start date] to [end date]. Please contact me at [contact details] if you have any questions or concerns.
Sincerely,
[Your Name]
[Your Signature]
[Date]
Sample Bank Statement Authorization Letter
Mary Higgins
123 North Avenue
Birmingham, AL, 39002
+120029902, [email protected]
23 October 2030
To,
Jonathan Hillary
Alabama National Bank
100 First Avenue
Montgomery, AL 001001
Re: Authorization Letter to Duplicate Bank Statements
Dear Mr. Hillary,
I, Mary Higgins, of savings account 12AL228/09, hereby authorize Paul Higgins to collect my bank statements for the period between 1 October 2029 to 1 October 2030 for tax purposes. I am currently out of the state and unable to do this myself, which is why I am authorizing my son to do so on my behalf. I also authorize them to sign any necessary documents in my absence.
This authorization will be valid from 23 October 2030 to 27 October 2030. I have attached Mr. Higgin’s Identification Documents for your reference:
Authorized Person: Paul Victor Higgins
Identity Document: National ID
Identity Document No: US 102901
If you have any questions or concerns, contact me at [email protected]
Thank you for your time and consideration.
Sincerely,
Mary Higgins
Bank Account Access Authorization Letter
Lucy Reagan
600 Axel Street
Sacramento, CA 67073
23 October 2030
To,
Vivian Vanderboch
California United Bank
190 Yule Street
Los Angeles, CA 53432
Re: Authorization Letter for Bank Account
Dear Ms. Vanderboch,
I, Lucy Reagan, am an account holder with your bank, account number CUB20902-22. I hereby appoint Mary Warren to access my savings account and handle deposits on my behalf. The authorization only extends to deposits and not withdrawals for the stated account. Mrs. Warren’s details are as follows:
Authorized Person: Mary Wilkins Warren
Identity Document: Passport
Identity Document No: US 298100
The authorization is valid from 23 October to 30 October 2030. Please contact me at [email protected] if you have any questions or concerns regarding this matter.
Thank you for your time.
Sincerely,
Lucy Reagan
Final Thoughts
The purpose of an authorization letter for bank is to identify the third party, the transactions they are allowed to perform on your behalf, the limits to these rights, and the duration within which these rights are valid. For authentication, it should also contain the signatures of the first and third party.
