What is an escrow account in a bank?

Escrow account is a third party account which holds money until the final transaction takes place. An escrow account is set up to prevent frauds and financial crimes in high-asset value transactions. This is what is an escrow account in a bank means.

So far you must have understood what is escrow account. Let me also tell you how it works and when we can use it.

Let’s say you buy a flat and you are asked to make a portion of the payment before you get ahold of the property. To ensure that the property is delivered to you in sound condition, and to assure seller that the payment will be done, an escrow account can be opened. This will ensure that both parties hold up their end of the bargain. This is one of the cases when an escrow account can be used. I hope this clarifies that part of how it works.

My friend at the PNB explained that in their bank a RERA account or a separate account has a few restrictions. These are:

• No minimum balance maintenance requirement.

• No cheque book, ATM & IBS Facility.

The funds withdrawn from an escrow account should be used for the said purpose only. 

This is all I know about what is an escrow account in bank.

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