Correspondent Banking and NRI Accounts
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What is correspondent banking?
Correspondent banking is an arrangement where one bank (correspondent) provides services on behalf of another bank (respondent) in a different country or location, facilitating cross-border transactions, payments, and trade finance.
What is the primary purpose of a correspondent banking relationship?
To facilitate cross-border payments and banking services internationally.
What is a NOSTRO account?
A NOSTRO account is an account maintained by an Indian bank in a foreign country in the currency of that country, used to settle foreign exchange transactions; the term comes from Latin meaning 'our account with you'.
What is a Vostro account and in whose books is it maintained?
Account maintained in domestic bank's books for a foreign correspondent bank.
What is a VOSTRO account?
A VOSTRO account is an account maintained by a foreign bank with an Indian bank in Indian Rupees; it is the mirror image of a NOSTRO account and represents 'your account with us'.
What is the SWIFT network primarily used for in correspondent banking?
Secure messaging and instructions between banks for international transactions.
What is a LORO account in the context of correspondent banking?
A LORO account refers to a third-party account, meaning 'their account with them'; it is used when a bank refers to an account held by a second bank at a third bank, facilitating multi-bank settlement.
What is an IBAN and why is it important in international transfers?
International Bank Account Number; ensures accurate routing of cross-border payments.
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