What Is The Purpose Of A Deposit Account Control Agreement

Counsel for the custodian institution must inform the custodian institution of how the proposed changes will affect each party`s respective rights and obligations under DACA and the practical consequences of these changes for the custodian institution`s relationships, business and operational teams. In addition, the custodian institution`s lawyer must have a thorough understanding of what the market is and reject inappropriate requests from other parties that are not in compliance with the market. It is important for a custodian institution to evaluate its DACA forms and DACA review and implementation process from time to time to ensure that unnecessary risks do not arise. A lender is an important member of the agreement, so from their perspective, here are some provisions that should be included in the agreement – the depositary or institution can also play an important role in DACA; After all, the lender comes to the organization in case of default. First and foremost, the borrower must pay attention to the type of control he wants to give to the lender. In exchange for the loan, the lender must receive perfect security, but in most cases, the borrower also wants access to their deposit account. Why do lenders use deposit account control agreements? Often, customers do not host their deposits with their lenders, and some lenders do not offer deposit accounts. Lenders make arrangements for controlling deposit accounts as an additional protection against defaults and to help them repay their loans….

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