Banking Term: Correspondent Bank
Jun 30, 2015 14:41 IST
- 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.