Precautions for opening of an account in the name of an attorney
What precautions should the banker take while opening of an account in the name of an attorney?
A customer may appoint an attorney to deal with his bank account. The power of attorney may be either special or general. In the case of special power of attorney, the person so authorised gets power only for some limited purpose mentioned, that is sale or purchase of property, etc. In the keys of general power of attorney, the grantor of power authorises the other person to act on his behalf in all matters concerning his business.
While opening an account in the name of an attorney for a person, the bank should take the following precautions:
1.The banker should get a copy of the registered document attested by a notary public and keep it for his own record.
2.The banker should see that the power of attorney is in force at the time of opening the account.If it is for a specific period, the period must be noted at the top of the account so that the account does not continue beyond such period.
3. The banker should take note of all the terms of the power of attorney which are likely to be of concern to him at any time.
4. It must be seen that specific power is granted for the opening and operating a bank account by the Attorney himself
5. The banker should note down the name and address of the person who has granted the power of attorney.
6.The account opening form should be signed by the principal and the signature of the Attorney must be attested by him
7. The banker should not accept any conditional power of attorney. A condition like “ during may absence from India,” implies that the power of attorney is automatically cancelled as soon as the principal returns to India.
8. The banker should note that the death, insolvency or insanity of the principal revokes the authority vested in the agent and the latter ceases to act as agent of the principal.