Elderly Customer, Registered POA and a Sudden ₹12 Lakh Cash Withdrawal
A 78-year-old widow maintains a sole savings account at a semi-urban branch with a balance of ₹19.6 lakh. Six months ago she registered a general power of attorney in favour of her nephew, and her daughter is the registered nominee. On Monday the nephew presents a signed withdrawal form for ₹12 lakh in cash, saying the money is for a grandson’s shop deposit. The customer is present, but she appears confused, cannot explain the purpose, and repeatedly looks at her nephew before answering. The branch also has an undated note from the daughter saying her mother has early dementia and is being pressured. The POA is genuine, registered, and bears the customer’s photograph. The passbook and cheque book are with the nephew. The branch manager must decide whether to pay before close of business, and the nephew is becoming impatient.
1. Can the branch honour the registered POA and pay ₹12 lakh in cash immediately? Set out your decision and the safeguards you would apply before any payment.
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A registered POA gives the nephew legal authority to act, but it does not remove the bank’s duty of care to the account holder. The branch should not pay immediately on the facts. The customer’s confusion, the nephew’s control of the passbook, the daughter’s note and the unusual cash request are red flags for elder financial abuse or lack of free consent.
The manager should separate the customer from the nephew and interview her privately, using simple questions about the amount, purpose and whether she has received independent advice. Verify her identity and recent account conduct. Record her answers and any refusal to answer. If doubt remains, hold the payment and explain that further verification is required. The bank may seek a medical opinion or confirmation from a trusted person only with the customer’s consent, unless its vulnerable-customer policy requires escalation. If the customer is lucid and insists, process after documented manager approval, but consider paying by cheque or transfer rather than cash. Do not let the nephew pressure the branch. The nominee has no authority while the customer is alive.
2. The daughter asks the branch to freeze the account and disclose the POA and account details. How should the branch respond?
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The daughter is a nominee, not a joint holder or attorney. A nominee’s rights arise only on the account holder’s death; during her lifetime the nominee cannot operate, freeze or demand information about the account. The branch must not disclose the POA, balance or transaction details to the daughter without the customer’s consent or a lawful order.
The branch should acknowledge the daughter’s concern, explain the legal position briefly, and record her complaint under the vulnerable-customer or elder-abuse process. It may offer to arrange a welfare conversation with the customer if the customer agrees. It should not tell the nephew about the daughter’s note. A freeze is justified only on the customer’s instruction, a court or enforcement order, or a genuine risk of fraud supported by documented grounds and approved at the appropriate level. Family pressure alone is not a legal basis to freeze. If the daughter produces a guardianship order or court direction, the branch must act on it after legal verification.
3. Suppose the bank pays the ₹12 lakh and the customer is later medically certified as having had dementia at the time. What is the bank’s position and what should it have done differently?
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If the customer lacked capacity, the payment may be challenged even though the POA was genuine. A POA is not a warranty that the donor understood the transaction. The bank’s good-faith reliance on the document helps, but it is not an absolute defence where the branch ignored obvious warning signs. The nephew as attorney owes fiduciary duties and may face civil or criminal action if he misappropriated the money. The bank could face a consumer complaint, banking-ombudsman claim or civil liability if it failed its duty of care.
The branch should have preserved the withdrawal form, POA copy, identity checks, interview notes, CCTV footage and any medical or family correspondence. It should also have considered holding the payment, obtaining the customer’s independent confirmation, and escalating under its vulnerable-customer policy. After the event, the bank should review the file, report suspected abuse to the appropriate authorities under policy, and cooperate with the customer’s family or legal representatives. It should not destroy records or treat the POA as sufficient by itself.