A correspondent account
is an account (often called a Nostro or Vostro Account
) established by a domestic banking institution
to receive deposits from, make payments on behalf of, or handle other financial transactions
for a foreign financial institution. This allows foreign banks to conduct business and provide services to their clients without the expense of a physical presence.
"Correspondent banking is also known as a relationship entered into between a small bank and a big bank in which the big bank provides a number of deposit, lending, and other services.