Nostro and vostro account definitions can be difficult to wrap your head around.
So, in this article, we’re explaining everything you need to know about them. We’ll also be sharing specific insights on India as it has recently made vostro accounts available to foreign banks.
This article is part of our free series on how to open a bank account, which covers bank accounts for all possible scenarios, including when an account has been deemed dormant.
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Nostro and Vostro Account
- What’s the Difference Between Nostro and Vostro Accounts?
- Frequently Asked Questions
- Ready to Explore Your Options?
Nostro and Vostro Account
Nostro and vostro accounts are used when one bank opens and maintains an account with another bank. These two “accounts” actually refer to two sets of accounting records maintained for the same account. Nostro refers to the records held by the account opener, while vostro refers to the records held by the account provider.
What’s the Difference Between Nostro and Vostro Accounts?
The main difference between nostro and vostro accounts is that nostro refers to the account records held by the bank making the deposit and vostro refers to the accounting records held by the bank holding the deposit. In other words, the actual account is the same but there are two sets of books maintained by both banks.
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Frequently Asked Questions
Below are three of the most common questions that we receive from people looking into the difference between a nostro and vostro account. If you have further questions you would like answered, don’t hesitate to get in touch with us directly.
What Is Vostro Account RBI?
Vostro account at RBI refers to an account that is held for the benefit of another financial institution at RBI. In other words, foreign banks have bank accounts with the RBI in order to directly hold rupee deposits. This is part of India’s broader plan to start settling international trade in rupees, which vostro accounts help facilitate.
Which Indian Bank Has a Nostro Account?
Nostro account refers to an account that is held with another bank in a foreign currency. With this in mind, many Indian banks have nostro accounts. In fact, most Indian banks have nostro accounts in different countries, enabling their clients to send funds directly to these foreign currency accounts.
Are Nostro and Vostro Accounts the Same?
Yes, technically speaking, nostro and vostro accounts are the same as they refer to accounting records maintained for the same account. However, nostro and vostro have two very different meanings, both derived from Latin. Nostro refers to “our account” while vostro refers to “your account”. In short, nostro and vostro refer to the different accounting records that are maintained when one bank holds funds at another bank in the holding bank’s home currency.
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