55. Some suggest that India needs to move to an escrow-based payment mechanism to ensure a fearless business environment in the country.

Which of the following correctly describes an escrow account ?

1. A third-party bank account for safeguarding the buyer from the risk of seller defaulting on the quality of goods and services.

2. A bank account used by individuals/firms for routing the funds through tax havens for the purpose of tax evasion.

3. A third-party bank account for safeguarding the seller from the risk of the buyer defaulting on the payment to the seller after having received the goods and/or services.

4. None of the above

Correct Answer :

A third-party bank account for safeguarding the seller from the risk of the buyer defaulting on the payment to the seller after having received the goods and/or services.