2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
Interbank settlements take place when the recipient and the payer are account holders in different banks. All transactions between financial institutions through correspondent accounts are organized in two ways: using centralized and decentralized systems.
Cash settlement centers
In Russia, the first option is most often used. For the implementation of centralized settlements, the subdivisions of the Central District Hospital - cash settlement centers (RCCs) are responsible. In order to conduct transactions, each banking institution must open a correspondent account with the RCC at its location. All relations between a credit institution and the central bank that serves it in the course of funds transfer transactions are carried out in accordance with the law and the correspondent account agreement.
Debiting funds from the CB subaccount or crediting them to this account is confirmed by an extract in the form of an electronic official document or on paper.
Interbank Settlement System
Operations through correspondent accounts opened with other banks are carried out as follows: the respondent bank concludes an agreement with another credit institution and opens an account here. A correspondent bank opens it after receiving the relevant documents from the respondent and signing the contract. The account opened by the CB in another banking institution is referred to as NOSTRO. And the one that opens another bank in this organization (CB) is "LORO". Settlement between financial institutions is subject to daily parity.
Types of interbank settlements
1. Settlements between banks through the RCC network. This system for transferring funds is the main one. If at least one correspondent account is opened in the RCC, this makes it possible to make transactions with any credit institution in the country.
2. Interbank settlements on open correspondent relations. The main advantage here is the absence of intermediaries in the implementation of settlement operations, which makes them faster and cheaper. Such interbank settlements are carried out on behalf of clients, but without their direct participation.
3.
Interbank settlement transactions through the domestic banking system - are used by large financial institutions that have a wide network of branches. This type of payment allows you to rationally allocate resources, maintain the liquidity of small units and increase the profitability of a credit institution.
4. Interbanksettlements carried out with the help of clearing centers. Clearing is an interbank system of non-cash settlements, which is carried out by special clearing houses with the help of mutual offset of payments. In this case, only obligations and claims are taken into account - net settlements. The main advantage of such a system is the acceleration and optimization of interbank transactions. But the presence of intermediaries makes this method of payment more expensive.
International correspondent commercial networks
To carry out this kind of settlement commercial international correspondent networks are being created: TARGET - an automated system in real time; SWIFT – community of worldwide financial communications between banks; CHIPS - electronic system of non-cash (clearing) settlements.
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