by Banks provide a wide range of financial services to individuals, businesses, and governments. The primary services include accepting deposits, granting loans, and facilitating payments. Banks offer demand deposits (savings and current accounts) for easy access to funds and term deposits (fixed and recurring deposits) for investment purposes.
Banks also provide loan services, including personal loans, home loans, business loans, and overdraft facilities. They play a crucial role in facilitating money transfers through services like NEFT, RTGS, IMPS, and UPI. Digital banking services, including internet banking, mobile banking, and ATM services, enhance convenience for customers.
Other services include issuing debit and credit cards, foreign exchange services, wealth management, and locker facilities. Banks assist businesses with trade finance, letters of credit, bank guarantees, and merchant banking. They also offer investment services such as mutual funds, insurance, and demat accounts for stock trading.
Banks act as financial intermediaries, ensuring economic growth by mobilizing savings and providing credit to productive sectors. Their services enhance financial inclusion, making banking accessible to all sections of society. With advancements in technology, banking services have become more efficient and customer-friendly.
Mandate in Banking:
A mandate in banking is a formal written authorization given by an account holder to another individual or entity to operate the bank account on their behalf. This authorization is typically used in business accounts, joint accounts, or personal accounts when the account holder is unable to manage transactions personally.
A mandate specifies the extent of authority granted, including the ability to sign checks, withdraw funds, deposit money, or operate online banking. It may be given to a single person or multiple persons, and can be revoked by the account holder at any time. Banks require a properly signed and verified mandate letter before allowing a third party to manage the account.
Mandates are commonly used in corporate banking, where company directors or financial managers are authorized to handle transactions on behalf of the business. They are also useful in personal banking when elderly individuals or those unable to visit banks delegate authority to trusted family members.
Mandates help in smooth financial operations while ensuring security and accountability. However, the account holder remains responsible for all transactions performed under the mandate, making it crucial to grant authority only to trustworthy individuals.
Power of Attorney in Banking:
Power of Attorney (POA) is a legal document that authorizes one person (the agent) to act on behalf of another person (the principal) in financial and legal matters, including banking transactions. The POA can be used when the principal is unavailable, incapacitated, or requires financial management assistance.
There are two main types of POA:
-
General Power of Attorney (GPA): Grants broad authority to manage all banking and financial transactions, including withdrawals, deposits, loan applications, and investments.
-
Specific Power of Attorney (SPA): Grants authority for a particular transaction or a set of predefined banking activities, such as selling property or closing an account.
To execute a POA, the principal must draft the document, sign it in the presence of witnesses, and, in some cases, register it with a legal authority. Banks require a notarized or registered POA before allowing the agent to operate the account.
While a POA ensures financial management flexibility, it carries risks. The agent must act in the principal’s best interest, and misuse can lead to financial loss. Hence, selecting a trustworthy agent and specifying clear limitations in the POA document is crucial.
