Can a Bank Reject Power of Attorney in Indiana?

Yes, banks can reject a power of attorney — but Indiana law makes them pay for it if the rejection is wrongful. The state's Three-Day Acceptance Rule (IC § 30-5-9-9) is one of the strongest consumer protections for POA holders in the country, and most families don't know it exists until they're standing at a bank counter watching a teller refuse their document.

Indiana's Three-Day Acceptance Rule

Under Indiana Code § 30-5-9-9, any financial institution presented with a properly executed power of attorney must accept it within three business days. If they refuse, they're exposed to:

• Treble damages — three times the amount of actual damages the agent suffered because of the refusal
• Attorney's fees — the institution pays the agent's legal costs for enforcing the POA
• Prejudgment interest — calculated from the date of the wrongful refusal

This isn't a theoretical penalty. It creates real financial exposure for banks that delay or refuse valid POAs without a legitimate legal basis.

When a Bank Can Legally Refuse

A bank has only three valid grounds for rejecting a POA under Indiana law:

1. Actual knowledge of revocation — The bank has been directly notified that the principal revoked the POA
2. Knowledge of the principal's death — The bank knows the principal has died (POAs terminate at death)
3. Written legal objection — The bank provides a written statement within ten business days explaining a reasonable basis to believe the POA is invalid or doesn't cover the specific transaction requested

That third category is where most legitimate bank concerns fall. If the POA is vague about financial powers, lacks proper execution (no notary and no witnesses), or the bank has reason to suspect fraud, they can refuse — but they must put it in writing with specific reasons, not just wave you away at the counter.

Why Banks Actually Reject POAs

In practice, bank rejections rarely happen for valid legal reasons. The most common scenarios:

Internal policy trumping state law. Many national banks have corporate compliance policies that require their own proprietary POA forms. Branch staff follow their policy manual, not Indiana statutes. They'll tell you "we don't accept outside POAs" — which is legally wrong in Indiana, but that doesn't help you at 4:45 p.m. on a Friday when your mother's mortgage payment is due.

Staff unfamiliarity. A teller or even a branch manager may have never seen a POA before. They don't know their state's acceptance rules, and their default response to an unfamiliar legal document is to refuse it and suggest you "come back with a lawyer."

Witness-only execution. Even though Indiana law allows a POA to be validated by two witnesses instead of a notary (IC § 30-5-4-1), banks almost universally require notarization. A witness-only POA is legally valid but practically unacceptable at most financial institutions.

Stale documents. Banks sometimes refuse POAs that were signed years ago, arguing they can't verify the document hasn't been revoked. Indiana law doesn't impose an expiration date on POAs, but banks treat older documents with more suspicion.

What to Do When a Bank Refuses

Step 1: Ask for the Refusal in Writing

Under IC § 30-5-9-9, the bank has ten business days to provide a written statement explaining their basis for refusal. Ask for this document immediately. This shifts the conversation from an informal "we can't help you" to a documented legal position that the bank's compliance department must defend.

Step 2: Escalate to the Branch Manager or Compliance Department

Tellers don't make legal decisions. Ask to speak with the branch manager. If they can't resolve it, request the compliance department's direct number. Reference IC § 30-5-9-9 specifically — compliance departments are generally aware of the three-day rule even if branch staff aren't.

Step 3: Present a Demand Letter

A formal letter citing the statute, the penalties for wrongful refusal, and a deadline for compliance often resolves the situation. The letter should include:

• A copy of the POA
• A citation to IC § 30-5-9-9 and the three-day acceptance requirement
• A statement that wrongful refusal exposes the bank to treble damages, attorney's fees, and prejudgment interest
• A specific deadline (the three-day statutory window)

Most bank compliance departments will accept the POA within 24 hours of receiving a properly drafted demand letter.

Step 4: Consult an Attorney If Necessary

If the bank maintains its refusal beyond three business days without providing a valid written objection, an attorney can file an enforcement action. The statutory treble damages and attorney's fees provision means the bank — not you — pays the legal costs.

Preventing Bank Rejection

The best defense is presenting the POA to your bank before you need it. Walk into the branch with the principal (if possible), present the notarized POA, and ask them to place it on file. Get written confirmation that it's been accepted and recorded in their system.

This eliminates the surprise factor. When the agent later needs to act under the POA during an emergency, the bank already has the document in their records and has already verified it.

Be Ready If They Say No

The Indiana Power of Attorney Kit includes a bank demand letter template based on IC § 30-5-9-9, pre-formatted with the statutory penalties — ready to hand to any institution that refuses your valid POA.

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