When drafting a letter of appropriation to the bank, it's essential to clearly specify details such as loan information, collateral, and authorization for utilizing the collateral in case of repayment failure. Maintain a polite and formal tone throughout the letter, expressing gratitude at the end.

Table of Contents:

Sample Appropriation Letter to Bank

From,
[Sender Address]
_____________
_____________

Date: __/__/____ (Date)

To,
The Manager
___________ (Bank Address)

Subject: Letter of Appropriation

Dear Sir/Madam,

With reference to the ___________ (loan details) issued by your bank in my name i.e. _____________ (Your Name) for the purpose of ___________ (loan purpose). I give you a lien of:

  • My _________ (Collateral details – Term Deposit/Property/Any other) with receipt ___________ (receipt number) issued by ___________ (issuing authority) amounting __________ (amount) handed over to you duly discharged by me.

I hereby authorize the bank __________ (bank name) to utilize the above said collateral for reimbursement of all unpaid amount in case ______ (failure of repayment /any other) i.e. payment for principal amount, interest levied, costs and charges, and all other expenses in reference with Loan account number _____________ (loan account number).

Thanking You,
Regards,
___________ (Your Name)
___________ (Contact Number)

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FAQs

  • Why is it necessary to provide collateral details in the letter of appropriation?
    • Providing collateral details ensures clarity regarding the assets being utilized as security for the loan.
  • What should be included in the authorization for collateral utilization?
    • The authorization should clearly specify the bank's authority to utilize the collateral for reimbursement purposes in case of repayment failure.
  • Is it important to include the loan account number in the letter?
    • Yes, mentioning the loan account number helps in identifying the specific loan associated with the authorization.
  • Should the letter be signed by the borrower?
    • Yes, the letter should be signed by the borrower to authenticate the authorization for collateral utilization.
  • What tone should be maintained in the letter of appropriation?
    • The letter should maintain a formal and respectful tone throughout, addressing the bank manager appropriately.

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