The global financial system relies heavily on connectivity. Whether transferring money across international borders or trying to open a basic savings account in a remote rural village, individuals and businesses need a way to access banking infrastructure. However, building physical bank branches everywhere is incredibly expensive and logistically impractical.
To solve this problem, the financial world relies on a brilliant system known as banking correspondents. Operating at both the global corporate level and the grassroots community level, banking correspondents act as vital intermediaries. They extend the reach of established banks, driving financial inclusion locally and enabling seamless cross-border commerce internationally.
Defining the Dual Nature of Banking Correspondents
To fully grasp the concept of a banking correspondent, it helps to understand that this term exists in two distinct spheres of finance: international banking and local financial inclusion.
1. International Correspondent Banking
On a global scale, a correspondent bank is a financial … Read more
They concentrate on offering fastened and saving deposits in addition to credit score amenities to individuals and companies. They may not provide deposit accounts that are repayable on demand by cheque, draft or order. Generally, finance companies shall not grant unsecured credit score services to any particular person or body of persons, which in the aggregate and outstanding at anybody time exceeds S$5,000. Finance companies aren’t allowed to deal in any foreign forex, gold or different precious metals or acquire international currency denominated shares, shares or debt securities. They might develop their scope of actions subject to MAS’ approval.