When a client in New York pays your invoice in dollars, those dollars never actually leave the United States. They move into a dollar account that your Indian bank keeps with a bank in America, and your bank then pays you in rupees. That account is a nostro account, and the same account, seen from the American bank's side, is a vostro account.
Nostro (Latin and Italian for 'ours') is a bank's account held with a bank in another country, usually in that country's currency. Vostro ('yours') is the same account as recorded by the bank that holds it. Every cross-border bank payment runs through accounts like these (see how swift payment works), which is also why charges are taken along the way.
- Nostro: 'ours', held abroad in foreign currency, an asset for the bank that owns it.
- Vostro: 'yours', held at home for a foreign bank in local currency, a liability for the bank that holds it.
What is a nostro account?
A nostro account is an account that a bank holds with a bank in another country, in that country's currency, so it can make and receive payments in that country without opening a branch. The name means 'ours', and the owning bank records it as an asset; for example, SBI's US dollar account with a bank in New York is SBI's nostro.
What is a vostro account?
A vostro account is the same account seen from the other side: an account a bank holds on behalf of a foreign bank, usually in its own local currency. The name means 'yours', and the holding bank records it as a liability, since the money belongs to the foreign bank; HDFC Bank holding rupees for a UK bank is an example.
Nostro vs vostro accounts: one account, two sets of books
The key difference between a nostro and a vostro account is whose books you are reading: the same dollars appear as an asset in the Indian bank's books and as a liability in the US bank's books.
Say a client in the US pays $2,000 to an exporter who banks with SBI. Here is what each bank records.
| SBI's books in India | New York bank's books | |
|---|---|---|
| Name of the account | Nostro: 'our account with you' | Vostro: 'your account with us' |
| Entry when the $2,000 arrives | Debit nostro (asset up by $2,000); credit the exporter, who is paid in rupees | Credit SBI's vostro (liability up by $2,000); debit the client's bank or account |
| What the balance means | Dollars SBI owns and can spend in the US | Dollars the New York bank owes SBI |
| If the balance goes negative | SBI has overdrawn: a liability | The New York bank has lent to SBI: an asset |
Every nostro therefore has a matching vostro, and the two banks check their entries against each other daily. On the Indian side, SBI converts the dollars and records an rbi purpose code for inward remittance before paying the exporter. At a glance:
| Feature | Nostro account | Vostro account |
|---|---|---|
| Translation | 'Ours' | 'Yours' |
| Who owns it | The bank that placed the money abroad | The foreign bank, held by the local bank |
| Currency | Foreign, e.g. USD held by SBI in the US | Local, e.g. INR held in India for a foreign bank |
| Balance sheet status | Asset | Liability |
| Primary purpose | Pay and receive abroad without a branch | Give a foreign bank access to local payments |
Nostro, vostro, loro and mirror accounts: the full family
A loro account ('theirs') is how a third bank refers to an account between two other banks, and a mirror account is the internal copy a bank keeps of its own nostro to reconcile it; only nostro and vostro are real balances.
- Nostro ('ours'): the word used by the bank that owns money abroad; it pays and receives in a foreign currency.
- Vostro ('yours'): the word used by the bank holding that money; it gives a foreign bank local access.
- Loro ('theirs'): the word a third bank uses for an account between two other banks, usually when a payment is routed through it.
- Mirror account: the owning bank's internal copy of its nostro, matched daily against the vostro statement (nostro reconciliation), which is how missing or delayed payments are traced.
Why does a payment from abroad arrive short? Nostro charges
Nostro charges are fees that correspondent and intermediary banks deduct as a payment passes through their nostro and vostro accounts, commonly $15 to $50 a transfer, and the sender's charge code decides who bears them.
| Charge code | Who pays | What you receive |
|---|---|---|
| OUR | Sender pays all charges | The full amount, before your bank's exchange markup |
| SHA | Each side pays its own bank; intermediary charges come off the payment | Invoice minus deductions in transit |
| BEN | You pay all charges | Invoice minus every fee in the chain |
On a $2,000 payment sent SHA, two intermediaries taking $20 each leave about $1,960, and a bank rate of ₹93.50 against an illustrative ₹95 mid-market rate takes another ₹2,940: you expected ₹1,90,000 and receive about ₹1,83,260. The full list is in correspondent bank charges.
Charges also vary by bank, because each bank uses its own correspondents, and every extra hop can add a day; if a payment is late, give your bank the sender's SWIFT reference (UETR) so it can trace which nostro the money is waiting in. Asking clients to send OUR, or letting them pay into local account details in their own country, avoids most of the chain. Xflow, for example, provides such accounts and settles rupees to your Indian bank account at the live mid-market rate with an eFIRA for every international transaction.
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What is a Special Rupee Vostro Account (SRVA)?
A Special Rupee Vostro Account is a rupee vostro that a bank from a partner country opens with an Indian bank so that trade can be invoiced and settled in rupees: overseas buyers of Indian exports pay rupees into it, and Indian exporters are paid from it.
- Created by RBI's circular of 11 July 2022; since 5 August 2025 Indian banks can open SRVAs without RBI approval; current rules are consolidated in RBI's circular of 17 July 2026, with SRVAs listed on the FEDAI website.
- Surplus balances can be invested in Indian debt under RBI's non-resident debt rules, with no FPI registration needed for Treasury Bills or government securities (RBI FAQ, 30 July 2026).
- By February 2025, 123 correspondent banks from 30 countries had been allowed 156 SRVAs with 26 Indian banks (Rajya Sabha reply).
Frequently asked questions
It is the amount a bank holds in its nostro account at any moment. Banks watch it daily so there is enough foreign currency to settle outgoing payments without overdrawing.
A bank can only hold accounts in another country's payment system through a local bank, so cross-border payments settle by moving money between nostro and vostro accounts rather than between the two countries.
There is none. They are Latin and Italian words for 'ours' and 'yours'.
No. Only banks hold them; your payment from abroad lands in your bank's nostro before it is converted and credited to you.
No. NRE and NRO accounts are held by non-resident Indians with Indian banks; nostro and vostro accounts are held between banks.
Very large sums are kept pre-funded abroad; McKinsey estimated about $5 trillion globally in 2016, and no official current figure is published.
Ripple says its On-Demand Liquidity service moves money across borders without pre-funded nostro accounts, using XRP as a bridge; most bank payments still use nostro and vostro accounts.
