Correspondent account - is a type of account that the bank opens another bank or in the division of the Central Bank to reflect payments that are held in such a credit institution on behalf of and at the expense of the bank.
basis for transactions on a correspondent account is an appropriate correspondent agreement concluded between the relevant credit institutions.
This agreement specified payment methods, order communication and counting mode, the duties and rights of each party, liability and penalties for breach of contractual obligations, the conditions for obtaining the fee for the use of correspondent accounts, payment of telegraph, postal and other expenses, the validity ofand the mechanism of its early termination, etc.
correspondent bank account can be one of several types:
- NOSTRO.This is a correspondent account in the name of the respondent bank (manager), which opens in the correspondent bank and the asset is recognized in the balance first.
- Loro.This is the current account opened by a correspondent bank to its respondent bank and reflected in the liabilities of its balance sheet.Correspondent loro accounts at a single institution is at the same time nostro accounts with correspondent banks.
- open.This account of a foreign bank in the resident bank, which opens either in local currency or the currency of a third country.In other words, this is the same account Loro, only it applies to foreign correspondent banks.
bank's correspondent account in its economic essence is a kind of deposit on demand.On the functions it resembles the organization of the current account, but taking into account the peculiarities of banking.
such accounts commercial banks stored as attracted and own funds, which are temporarily available at the moment.Correspondent account holding fairly reflects the wide range of operations.
Firstly, it is the transactions with cash, credit and settlement services and other clients of the bank.This includes collecting and transferring sums of money in connection with the sale and purchase of various goods and services, as well as the payment of taxes, duties and fees, which are made in favor of the budget, insurance companies, non-budgetary funds, and others.
certain part of the operations related to the reception andissuance of cash clientele for administrative and economic purposes and for the issue of bonuses and salaries to employees.Also on the correspondent account records transactions relating to the purchase or sale of securities or currencies, transfer of reserve requirements, as well as the operation of interbank deposits and loans.In addition, the corresponding account is used to reflect the business operations of the bank, for example, for administrative expenses, payments to the budget.Also for various extra-budgetary funds, etc.
After the signing of the correspondent agreement between the two banks, each of which opens a correspondent account, which is located a certain amount of money.Upon receipt of the first order by the bank customer to transfer a sum of money to the account of the counterparty to the correspondent bank, it debits the corresponding amount from the customer's account and transfers it to the correspondent account of the second bank.A second bank makes the transfer of an amount from the account of the respondent bank to the account of the final recipient of funds.
usually amounts on nostro and vostro accounts, which are open in accordance with an agreement the two correspondent banks remain comparable over time, as the payments often are "forward."However, this does not mean that the formation of a significant difference between the amounts in the accounts of one bank to lend to other free starts.This imbalance aligned correspondent account in the RCC.
