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Banking Term: Correspondent Bank

A financial institution that provides services on behalf of another, equal or unequal, financial institution. These banks are more likely to be used to conduct business in foreign countries, and act as a domestic bank's agent abroad.

Jun 30, 2015 14:41 IST
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  • A financial institution that provides services on behalf of another, equal or unequal, financial institution.
  • A correspondent bank can conduct business transactions, accept deposits and gather documents on behalf of the other financial institution. 
  • Correspondent banks are more likely to be used to conduct business in foreign countries, and act as a domestic bank's agent abroad.
  • A correspondent account is an account (often called a nostro or vostro account) established by a banking institution to receive deposits from, make payments on behalf of, or handle other financial transactions for another financial institution.
  • Correspondent accounts are established through bilateral agreements between the two banks.

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