A bank which acts as agent for another bank (known as the respondent bank) and offers that bank an account through which it can make payments for its own account and on behalf of its clients. Also, the correspondent bank accepts deposits and performs banking services for respondent banks . In most cases, the two banks are located in different cities or countries. Correspondent relationships don’t include transactions between banks as principals (i.e., in the wholesale market).
The correspondent bank is also known as an agent bank.
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