Can A Bank Be Term As An Intermediary

The term intermediary is define in Information Technology Act, 2000 it is - With respect to any particular electronic records, means any person who on behalf of another person receives, stores or transmits that record or provides any service with respect to that record and includes telecom service providers, network service providers, internet service providers, web hosting service providers, search engines, online payment sites, online-auction sites, online market places and cyber cafes...

INTERMEDIARY BANK:

Intermediary bank is a financial institution which acts as a facilitator between two parties for their different types of agreements like financial arrangement, contract of business, sale of property, loan or other agreements which require the payment guarantee to one party or to provide access to funding for completion of agreement.

Intermediary bank is a bank which act as a router, it is a pass through of any payment like when a person transfer money from his account to another person’s account then before it credit in to the recipient account first it goes to the intermediary bank and it holds the money until the receiving bank is available or it clears the payment. Intermediary bank acts on behalf of beneficiary bank because any payment is firstly reaching to it then after it is credited in to the recipient’s account.

Figure (a)

The above diagram shows flow of money from your (sender’s) bank to recipient bank. In this first the sender transfer the money to recipient so before the money reaches to recipient it first transfer to intermediary bank and if there is more intermediary bank then it transfer to them then it goes to the recipient’s bank and then the recipient bank credit it in to his account.

FINANCIAL INTERMEDIARY:

Financial intermediaries include a large number of entities in terms of scale and size of operation which is vary from a brokerage of small insurance to huge universal institutions that offer a complete range of financial services including management of asset, commercial and investment banking. 

Some areas such as advances in technology and investing the money, threaten to remove the financial intermediary, a fact known as disintermediation. For example, by the introduction of online brokerages system resulted as many of the investor directly investing in the markets and bypasses the traditional full-service brokerages. Disintermediation is much less of a threat in other areas of finance such as banking and insurance. 

As we discuss above the term intermediary and intermediary bank, it can said that yes bank can be term as an intermediary because bank is acts as a facilitator between two parties for their different types of agreements which require the payment guarantee to one party or to provide access to funding for completion of agreement.