Authorized Settlement Agent

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Definition: Authorized Settlement Agent

There are many banks and financial institutions in our country. All these banks are involved in innumerable transactions with each other. All these transactions are not involved in cash transfer between them but the net of the transactions are transferred and this transfer is done by the central bank (RBI). All the banks are not involved in this process.

Those banks which have the authority to submit checks and other such cash items to the central bank are called as authorized settlement agents. These payments are made through an automated clearing house (ACH).

Authorized settlement agents helps in the smooth functioning of banks in the system by discharging the payment obligations between the different parties.


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