📢 Are you preparing for JAIIB/CAIIB or bank promotions? Understanding the difference between Mandate and Power of Attorney is crucial! These concepts fall under the Banker-Customer Relationship and are frequently tested in banking exams.
In this article, we will break down:
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- ✅ What is a Mandate?
- ✅ What is a Power of Attorney?
- ✅ The key differences between them
- ✅ Examples and practical applications
- ✅ Important points for exams
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Before diving in, watch this detailed explanation:
📌 What is a Mandate?
A Mandate is a written authority given by an account holder to another person to operate their bank account on their behalf.
Key Features of Mandate:
- ✔️ Issued by an account holder to a third person (Mandatee).
- ✔️ Given in written form (Mandate Letter).
- ✔️ Bank verifies the signature of the mandatee.
- ✔️ Only temporary in nature.
- ✔️ Institutions cannot issue mandates – They must issue a Power of Attorney.
- ✔️ Automatically expires in case of death, insanity, or insolvency of the account holder.
- ✔️ Can be revoked anytime by the account holder.
📍 Real-Life Examples of Mandate Usage:
- ➡️ Businessmen frequently issue mandates to assistants to allow them to sign checks or withdraw money.
- ➡️ Elderly people may issue a mandate to their children to operate their savings account.
- ➡️ Medical emergencies may force a person to grant a mandate to a spouse to handle banking transactions.
📌 What is a Power of Attorney?
A Power of Attorney (PoA) is a legal document that gives a person (called the Agent or Donee) the authority to act on behalf of another person (called the Principal or Donor).
Key Features of Power of Attorney:
- ✔️ A legal document that must be signed and stamped.
- ✔️ Gives broad powers to the authorized person.
- ✔️ Can be issued by both individuals and institutions.
- ✔️ Used for financial transactions, property management, and legal matters.
- ✔️ Can be either General PoA (multiple transactions) or Special PoA (specific transaction only).
- ✔️ Revoking PoA requires legal formalities.
- ✔️ Automatically expires in case of death, insanity, or insolvency of the Principal.
📍 Real-Life Examples of Power of Attorney Usage:
- ➡️ A business owner issues a General Power of Attorney to a manager to handle financial transactions.
- ➡️ A person living abroad issues a Special Power of Attorney to a relative for selling property in India.
- ➡️ A CEO delegates financial powers to the CFO using PoA for a limited time period.
📌 Difference Between Mandate and Power of Attorney
| Feature | Mandate | Power of Attorney |
|---|---|---|
| Definition | A written authority given by an account holder to a third person for banking transactions. | A legal document that allows a person to act on behalf of another in financial and legal matters. |
| Authority | Limited to bank transactions. | Broader powers – covers financial, property, and legal matters. |
| Who Can Issue? | Only individuals. | Individuals and institutions. |
| Legal Formalities | No legal formalities required. | Requires proper documentation, stamping, and notarization. |
| Duration | Temporary. | Can be temporary or permanent. |
| Termination | Revoked anytime by the account holder or expires automatically. | Can be revoked but requires legal formalities. |
📌 Key Exam-Oriented Points for JAIIB/CAIIB
- ✅ Mandate is a simple authority, while PoA is a legal document.
- ✅ Institutions cannot issue a mandate; they must issue PoA.
- ✅ Mandate can be revoked anytime, but PoA requires legal formalities for revocation.
- ✅ PoA gives broader powers than a mandate.
- ✅ PoA is required for property, legal, and financial matters beyond banking transactions.
📢 Conclusion & Final Takeaway
Understanding Mandates and Power of Attorney is essential for both bankers and exam aspirants. This knowledge helps in real-world banking operations and ensures you ace your JAIIB/CAIIB exams.
🚀 Next Steps:
- ✔️ Did you find this useful? Comment below and share your doubts!
- ✔️ Save this post for revision before your JAIIB/CAIIB exam!
- ✔️ Watch the full video for more clarity: [Insert YouTube Video Link Here]
💬 Drop your questions in the comments – Let’s discuss and crack the exam together!
