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F8: Power Of Attorney (POA) in India

Power of Attorney (POA) for NRIs

Overview

NRIs usually stay outside India and infrequently visit the country. It is often not feasible for NRIs to visit India solely to manage financial interests such as investments, bank account operations, property transactions, or representation at government or financial institutions. While many transactions can be done remotely via digital means, physical presence is needed in some cases. A Power of Attorney (POA) can be invaluable in such situations.

What is a Power of Attorney (POA)?

A POA grants authority to an individual to legally represent you in specified legal matters and business transactions. The person granting the POA is called the principal, donor, or grantor, and the person receiving the POA authority is known as the holder, donee, or agent.

Key Points:

  • Principal Responsibility: The POA holder is usually a close relative or trusted friend, as the granter is ultimately responsible for the holder’s actions.

  • Preparation: The POA can typically be prepared by a lawyer. Safeguards, such as indemnity clauses, can be included to protect against any fraudulent actions by the agent.

  • Revocation: The POA is automatically revoked upon the death, bankruptcy, or insanity of the principal.

Benefits:

The primary benefit of a POA is that the NRI does not need to be physically present in India to manage specific matters. Instead, the authorized POA holder can represent them. Common matters handled via POA include:

  • Operating bank accounts.

  • Managing real estate transactions.

  • Entering into business contracts.

  • Representing in legal or tax matters.

  • Routine financial operations.

Limitations:

There are certain tasks that a POA cannot be used for, such as:

  • Opening a new bank account.

  • Obtaining a new insurance policy.

  • Repatriating funds overseas.

Types of POA:

  1. General Power of Attorney (GPA):

    • Scope: Used for a broad range of transactions.

    • Trust Level: Requires a high level of trust as it grants extensive authority.

  2. Special Power of Attorney (SPA):

    • Scope: Created for a specific task or transaction.

    • Risk: Comes with reduced risks of misuse due to its limited scope.

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