What is a bank letter?
This is a common question in our society today, and people may answer it differently depending on their understanding. Well, a bank letter is a document provided periodically by the bank to the requestor showing details and generalities about the economic and financial relationships between the bank and the requestor.
In this context, the requestor is the surety. Bank letter varies from one bank to another, depending on the surety expectations and also, information the bank is willing to share with the surety.
Yes, bank letters do differ. But there are similarities too in this letters. There are some standard features that must be present in every bank letter to earn it the name. Some of these features include:
Official bank letterhead
– Bank letters must have a heading at the top, which consists of the bank’s name, address, and a logo. This acts as a proof for a surety that it is from a particular bank the person is willing to get a bank letter from. Most banks have letterheads to show the professionalism of their business, which indicates their proficient corporate institution.
Date
– the date is another common feature in all bank letters. The date indicates the day the letter was written by the bank. The date is very crucial as it helps the surety know if the information is current or outdated. In most cases, the dates must be within the last six months. This is an indication that the information in the letter is still valid.
Name(s) of the account holder
– of course, every bank letter must contain the account holder’s name for the person to know if it is directed to the correct party. The requestor will compare the names of the client and those in the letter to see if it is the same person.
Types of accounts
– is it a personal account? A business account? Or lines of credit? Bank letters must be specific on the type of account the surety has in the bank. The account balance is shown in the bank letter, to give the requestor know how of what is in the statement.
If the bank letter is showing details regarding lines of credit, there is information that should not miss. In this situation, the bank letter should indicate the maximum amount of credit, the renewal date, the current amount owed, and the available amount in terms of dollars.
It is also advisable that the bank letter contains the general history of the accounts standing and a brief relationship between the requestor and the bank. The name, title, contacts, and signature of the Bank Officer writing the letter is also an essential feature in this case.
Why a bank letter?
Some institutions may request a bank letter before getting involved with any business relationships with an individual. This acts as additional information for the organization with the relationship a person has with the bank. A good example is a case where a university asks for a bank letter from a person providing financial support to one of their students.
In this case, the bank will write a letter to the school showing the relationship between the bank and the sponsor. The bank may indicate the amount of money the sponsor may afford, and if it can cater to the student’s needs within a semester. The date the account was opened is inclusive, and the current balance in the account also shown. This information will help the institution determine if the sponsor is capable of sponsoring the student or not.
You may be wondering how a person can get a bank letter, well, it is a straightforward process. Visit the nearest branch of your bank of choice, and ask from the customer care desk if you can get one with the kind of information of your interest.
If the customer care is not in a position to help, the branch manager can be of great help. In some cases, even the branch manager may not have the authorization to issue a bank letter, depending on the type of information needed in the letter. In such a case, you will be referred to the regional manager where there is an assurance of assistance.