Correspondent Bank

A Correspondent Bank is a financial institution that provides banking services to another bank or financial institution. Correspondent banking relationships are established to facilitate international transactions and allow banks to conduct business on behalf of their customers in foreign jurisdictions. In international trade and shipping, correspondent banks play a crucial role in processing and settling payment transactions, particularly for cross-border trade. They act as intermediaries, handling foreign currency exchanges, letters of credit, and other financial instruments to ensure smooth and secure international payments between buyers and sellers.