Bankers’ Special Relationship I JAIIB Exam 2022

When a consumer opens an account with a bank, the bank becomes obligated to the customer regarding specific rights and responsibilities. These rights and obligations are sometimes known as “Bankers’ Special Relationship.” In this blog you will find the special relationships between banker and customer.


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When a consumer opens an account with a bank, the bank becomes obligated to the customer regarding specific rights and responsibilities. These rights and obligations are sometimes known as “Bankers’ Special Relationship.” The special relationships between banker and customer are as follows:


  • A mandate contract is a contract between the parties in which the mandatary is expected to carry out a task in place of the mandator, and the mandator is just required to pay if agreed upon or mandated by law.
  • The consumer notifies the bank that he has appointed someone to manage his account on his behalf (mandate).
  • The customer verifies the mandate signatures that are gathered in the mandate letter.
  • Normally, the mandate is only granted for a certain time.
  • Institutional mandates are not acceptable.
  • A power of attorney can be issued by an institution.

Power of attorney

A power of attorney is an authorisation document in which people or legal organisations permit others to represent or act on their behalf to create and fulfil civil transactions. In general, two forms of POA are provided:

  • General or Universal
  • Special or Limited

Note: The mandate and power of attorney provide a third party with authority to act on behalf of the primary person or persons. In the operation of bank accounts, the powers of mandate and powers of attorney holders are relatively similar, although they are provided for various reasons and objectives. A mandate is a basic letter of authorisation signed by a constituent authorising the bank to run his or her account on his or her behalf.

Letter of authority

A letter of authorisation is used to reveal confidential information or delegate a specific responsibility. On the other hand, a power of attorney gives someone else complete authority to act and make decisions on their behalf. The authority can be limited to a specific task, such as the purchase of real estate or a business deal, or it can be broad, granting complete authority to make all decisions on their behalf.

Comparison between Power of Attorney and Letter of Authority

BasisPower of AttorneyLetter of Authority
TypeLegal documentLegal document
FunctionDelegates authority to another person or entity to act on their behalf and take decisions.Delegate important legal, medical, or financial responsibilities to another individual or entity.
PurposeTo act like you and make decisions on your behalf.To be present on your behalf and carry out a task.
AuthorityComplete Authority – Can do everything on their behalfPartial Authority – Can only do something on their behalf
ContentsFor clarity and communication, comprehensive details of all parties involved must be specified, as well as precise, in-depth details.For clarity and communication, complete details about the involved parties must be specified, as well as precise, in-depth details.
PowerMore PowerfulLess Powerful
Task used forShould be employed for jobs that are more complex or specialised.Should be used for less complicated tasks
DetailsMore detailedLess detailed
DirectionsOutlines the steps that must be followed to fulfil the job.The directions in which the tasks should be accomplished may or may not be specified.
NotarisedNotarised CertificateSimple letter. No notary requires.
UsesProperty Purchase, Business deals, Making medical decisions on your behalf, etc.Pick up government papers on your behalf, acquire access to your personal information or files on your behalf, gather data on your behalf, pay bills or earn money on your behalf, and so on.

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The Bankers’ Special Relationships has been extensively covered in this article to help our readers prepare for their exams. We encourage them to study diligently, thoroughly covering all of the exam’s topics to score well in the competitive exams.


Q. What is a Power of Attorney?

A. A power of attorney (authorisation) is a document that allows people or legal entities to designate or act on their behalf in the creation and completion of civil transactions.

Q. What is meant by Secrecy of the Customer’s account?

A. A banker has a legal obligation to keep the customer’s account information confidential. The banker is not allowed to reveal any information about the customer to anyone. But, there are several exceptions for certain situations.

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