Though you have the account mandate, the change of mode of operation in a bank account has to do with certain rules given by the bank.
What needs to be done in order to change the Mode of Operation? Let’s find it out.
The bank account operation depends on what type of mode of operation you set for the account.
The mode of operation is the mandate that you give to your bank when opening an account. It lets you decide how you are going to operate it. Is it you or someone else?
As long as the bank account is in a single name, there should not be any issue related to the mode of operation.
As the account is in your name, you would be the only person who operates the bank account. No one else can access your account. It’s as simple as that.
The requirement of Mode of Operation arises when there are multiple account operators. You can expect the requirement of the mode of operation mandate when you have a joint account.
Though there are a number of joint accounts, we will discuss some of the common forms of joint accounts and their account operation.
Single Account and the Need of Mode of Operation.
As long as you don’t have any issues when accessing the bank account, there should not be any requirements for it. But, there may be certain times when you are unable to visit your bank physically.
That’s the moment when you wish for someone to handle your bank account for normal transactions.
If that is the case, you may execute the Power of Attorney and let someone operate your account in your favour. Most senior people usually use Power of Attorney to make their lives simple.
As you know, in old age things are not the same as we do. Physically as well as mentally they need support from the near ones.
How to Execute the Power of Attorney.
It is done with the advice of an advocate. All you have to do is identify the person who is going to operate your account in your favour. Here’s how you should proceed-
| 1 | If you have a friend who is an advocate then you could do it in a much simple way. Else, hire one and consult with him. That’s the initial step. |
| 2 | Find the pros and cons of Power of Attorney and what type of Power of Attorney best suit your situation. By the way, you can advise the advocate on the terms of the POA. This means you can limit the account operation rights to the donee. |
| 3 | You will be the doner. Now find the donee and let him understand what you intend to do with your account. |
| 4 | Your advocate will draft the terms and conditions of the Power of Attorney agreement. Read it carefully also, let the donee understand it clearly to avoid future complications. |
| 5 | Now submit these documents to your bank and let them mark in your bank account. So that, next time you won’t have to visit the bank to withdraw or deposit cash. |
Can You Change the Power of Attorney to Someone Else?
You can say it is kind of possible. The Power of Attorney agreement has to terminate in order to execute fresh with a new donee. Or when the existing agreement expires, you may execute with the new person.
When you do that, you need to inform your bank about the changes in account mandate.
Now, let’s move on to the joint accounts. Literally, a joint account is an account that is operated jointly by multiple users. These users can be owners of the assets or they can be the represented person of a company. Some of the common forms of joint accounts are-
| 1 | Family Joint Accounts. It can be a savings bank or a current account. For example- a bank account in the name of Mr X and Mrs X. |
| 2 | Society Joint Accounts. |
| 3 | Business Partnership Account. |
| 4 | Company Account. It can Public Limited Company as well as a Private Limited Company. |
| 5 | Government Accounts which operated by appointed government officials. |
Change of Mode of Operation in these Joint Accounts.
We have seen that most banks do not provide a standard format for changing of Mode of Operation in a bank account. Whenever we approach the bank usually advise us to give the proper mandate in writing along with the necessary documents.
Here are some of the facts about changing the mode of operation.
Account in Joint Family Name.
You have the option to choose the mode of operation when opening the account. The changes of it post account opening would be as per your request letter.
Before handing out your application, choose which type of account operation you prefer. Is it Either or Survivor, Jointly, Former or Survivor or Latter or Survivor? Mention it in your application and submit it to the concerned staff. That’s it, your mode of operation in a particular account would be as per your advice.
When you want to change it from Jointly operation to Eor S or any other form of account operation, you can do it with a fresh mandate letter to the bank. If your bank asks for KYC documents, you have to submit them accordingly.
The Former or Survivor on NRO Account.
The Central Bank has directed all the banks about the terms and conditions of the NRO accounts. An NRO account is a bank account maintained by an NRI for receiving deposits and income earned in India. As such, an account operation mandate is a must.
As per RBI, the NRO account should be jointly operated. The account mandate should be Former of Survivor where the former is the NRI (Primary account holder) and the survivor is the resident Indian (Second account holder).
If your NRO account is not mandated properly, make changes as soon as possible. You may see the sample format here.
Change of Mode of Operation in other Accounts.
The change of mode of operation in the bank accounts of Societies, Partnership, Company and Government Organisations are somewhat the same.
Changes in these accounts may need board resolutions, consent from all the board members as well as other members, direction given by the apex government authority etc.
So, in case, you are one of the concerned persons who is looking for changes in account operation. You have to meet the following conditions.
| 1 | For Society Account- Board resolution is a must with the consent of all the members of the society. The changes should be unanimously accepted by all the members. The addition and omission of any users from the account operators should be clearly mentioned in the resolution. |
| 2 | In Partnership Account, all partners should agree upon the changes in the mode of operation in their account. Changing joint operations to power of attorney is also possible with the proper execution of legal papers. |
| 3 | Company and Government Accounts need orders from higher authorities about the changes in the mode of operation. |
Conclusion
Change of mode of operation in bank accounts is not common under normal circumstances. Especially in a single-operated bank account, the change of mode of operation is not required at all. However, if power of attorney is exercised, then it could be. Mostly joint-operated accounts come with this query of changing the account operation mandate.
A joint account in a family name is somewhat easy to change the mode of account operation but other joint accounts such as bank accounts of societies, partnership firms, companies and governmental organisations are quite complex as they require the production of certain documents which are usually not agreed upon by all the members of the organisations.
Unfortunately, presently we have not seen the online facility to change the mode of operation in the bank account. Banks usually accept when you submit the papers offline along with the required documents.
