Correspondent Bank Meaning

Correspondent bank is the term which is used in the context of transactions relating to foreign exchange or currency. It refers to arrangement where a domestic bank or financial institution partners with one or more financial institutions abroad so that it can offer wider services to its customers relating to foreign exchange transactions like transfer of money, remittance to various parties in foreign countries and other such day to day transactions.

Correspondent bank is ideal for those financial institutions which have no or limited number of  branches in foreign countries and in order to provide better services to the customer of the bank without incurring the additional cost of setting up branch and also it helps in saving other miscellaneous administrative expenses.

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