Escrew Cheque?
This query is : Resolved
15 April 2008
What is escrew cheque? How it is different from other cheques?
06 May 2008
An Escrow Account refers to assets or revenue streams held in safe custody as safety against a contingent situation of non-fulfillment of a contract. In simpler words we may say that an escrow a/c is a third party arrangement to ensure performance of certain obligations between certain parties and operated in terms of an underlying agreement. The account will be a current a/c without cheque drawing facility or a Fixed Deposit account, as defined in the terms of the agreement.
Escrow a/c's are typically used for lending arrangements, project financing, Securitisations, M&A's, Buy-back of shares, take-overs, custody, litigations, purchase & sale of land, Source code (used in software) custody, etc. The following reasons enumerate why Escrow accounts are opened:
Provides greater security & comfort
Trapping of identified cash flows
Regulatory requirements
Custody of cash / documents
Ease of monitoring
The funds in the Escrow a/c are held for the benefit of the Beneficiary of the a/c rather than person / company in whose name the a/c is opened. For e.g.. in a borrower lender arrangement, the a/c name is "Borrower - Escrow a/c" and the funds deposited are that of the borrower but the funds are held in the escrow a/c for the benefit of the Lender.
Escrow a/c's are typically used for lending arrangements, project financing, Securitisations, M&A's, Buy-back of shares, take-overs, custody, litigations, purchase & sale of land, Source code (used in software) custody, etc. The following reasons enumerate why Escrow accounts are opened:
Provides greater security & comfort
Trapping of identified cash flows
Regulatory requirements
Custody of cash / documents
Ease of monitoring
The funds in the Escrow a/c are held for the benefit of the Beneficiary of the a/c rather than person / company in whose name the a/c is opened. For e.g.. in a borrower lender arrangement, the a/c name is "Borrower - Escrow a/c" and the funds deposited are that of the borrower but the funds are held in the escrow a/c for the benefit of the Lender.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- GST on export of services and Input Credit
- ITC temporary reversal and reclaim
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Tds on building rent monthly
- GST ON EXPORT COMMISSION
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding einvoice taken on nil rated sales
- Strategical investment in Public listed company
Trending Online Classes
CAclubindia
