Nostro Account

A Nostro account is a bank account held by an Indian bank in a foreign country, denominated in the currency of that foreign country — used to facilitate international trade settlements, foreign exchange transactions, and cross-border fund transfers. The term originates from the Latin word for 'ours' — reflecting that it is 'our account held abroad.' For example, State Bank of India may maintain a Nostro account in US dollars at a correspondent bank in New York to settle USD-denominated import and export transactions on behalf of its Indian corporate clients. The counterpart from the foreign bank's perspective is the Vostro account ('your account held with us'). In India, Nostro accounts are critical for banks that actively participate in international trade finance, forex market making, and foreign currency lending. RBI regulates the maintenance of Nostro accounts by Indian banks and sets guidelines on the balances that may be maintained. Nostro reconciliation — matching the bank's internal records with the foreign correspondent bank's statements — is an important treasury operations function.