Financial Risk Manager

Ways of Financial and Risk Management

Nostro and Vostro Account
Friday, March 27, 2009

Literal meaning of Nostro and Vostro is “ours and yours”. Speaking from the bank's point-of-view: A nostro is our account of our money, held by you and vostro is our account of your money, held by us.

Nostro Account: is a foreign currency current account maintained with another bank. The account is used to receive and pay currency assets and liabilities denominated in the currency of the country in which the bank is resident.

Vostro Account: is a local currency account maintained by a local bank for a foreign (correspondent) bank. For the foreign bank it is a nostro account.

For example: National Bank does some transactions (loans, foreign exchange, etc.) in US$, but banks in Pakistan will only handle payments in Pak Rs. So NBP opens a US$ account at foreign bank Citibank New York, USA, and instructs all counter-parties to settle transactions in US$ at "account no.123456 in name of NBP, at Citibank New York, USA. NBP maintains its own records of that account, for reconciliation; this is its nostro account. Citibank New York, USA record of the same account is the vostro account.

Labels: Treasury

posted @ 9:54 AM,

2 Comments:

At July 11, 2009 at 8:29 PM, Anonymous said...: is there any audit program for certifying Nostro balance
At September 23, 2012 at 8:18 PM, Taha Zubair Ahmed said...: Hi, I am a software Engineer for some project clarification i need to know the Vostro and Nostro Account, this post helps me a lot in front of many results find on internet......

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