What Are Nostro and Vostro Accounts? Meaning, Differences, Charges and How They Affect Your Inward Remittance

A nostro account and a vostro account are two views of the same banking relationship.

A nostro account is a foreign-currency account one bank holds with a bank in another country (“our account with you”).

A vostro account is that same account seen by the bank that holds it for the other (“your account with us”).

So when an Indian bank keeps a US-dollar account with a bank in New York, that account is a nostro for the Indian bank and a vostro for the American bank.

The words come from the Italian for “ours” and “yours”.

For any Indian business that relies on cross-border payments to get paid, this is not just trivia.

Nostro and vostro accounts are the route your money travels before you receive international payments in india bank account.

The charges taken along that route are why the amount that lands is often lower than what your client sent.

This guide covers what each account is, how they differ, where loro and mirror accounts fit in, what nostro charges are, and what it all means when you get paid from abroad.

Here is the quick reference before we go deeper.

The single idea to hold on to: a nostro and a vostro are the same pool of money, recorded twice from two points of view.

Every nostro account has a matching vostro account somewhere else.

A nostro account is a foreign-currency account that a bank holds with a bank in another country, so it can send and receive money there without opening its own branch.

“Nostro” is Italian for “ours”, so it means “our account, held with your bank”.

There is no acronym or full form to memorise. It is a plain descriptive term, not an abbreviation.

An example makes it concrete. Suppose the State Bank of India needs to settle US-dollar payments for its exporter customers.

Rather than build a branch network in the United States, SBI keeps a US-dollar account with a correspondent bank in New York.

From SBI’s side, that dollar balance is its nostro account. It is a foreign account maintained by an Indian bank abroad, and SBI records it as an asset, because it is real money the bank can spend or receive overseas.

This is also what people mean by a nostro account in forex. Your bank can quote a rate to convert an inbound dollar payment because it already holds dollars in nostro accounts overseas and rupees at home.

The nostro balance is the working capital that lets it hand you rupees today and reconcile the dollars later.

A vostro account is an account a domestic bank holds and operates on behalf of a foreign bank, in the domestic bank’s local currency.

“Vostro” is Italian for “yours”, so from the domestic bank’s desk it is “your account, kept with us”. It is the mirror image of a nostro.

Turn the SBI example around. If a bank in the United States wants to make rupee payments in India, it can hold an Indian-rupee account with, say, Punjab National Bank.

From PNB’s side in India, that rupee balance is a vostro account. It belongs to the US bank, but PNB holds and services it.

PNB records it as a liability, because the money is owed to the foreign bank, not owned by PNB.

Vostro accounts matter a great deal for money coming into India.

A large share of inward payments reaches beneficiaries through the vostro route: a foreign bank funds its rupee account at an Indian bank, and that Indian bank credits the local recipient.

If you want the compliance side of this, our explainer on how firc works with vostro payments covers how your Foreign Inward Remittance Certificate is still generated when funds arrive this way.

The difference is the vantage point, not the money. A nostro is the owning bank’s view of a balance held abroad; a vostro is the holding bank’s view of that same balance.

One account, two ledgers, two names. The table below sets the comparison out side by side.

Because the two are opposite views of one balance, banks compare their own nostro ledger against the correspondent’s vostro statement.

That reconciliation is how they catch missing or delayed entries, which is why the phrase “nostro reconciliation” comes up in banking operations. We return to it near the end.

A loro account is a third bank’s view of someone else’s nostro or vostro (“theirs”), and a mirror account is the internal copy a bank keeps of its own nostro. Neither is a separate pool of money.

A loro account describes an account from the outside. “Loro” means “theirs”.

If Bank A holds a nostro account with Bank B, a third bank talking about that same account would call it a loro: “their account with them”.

Loro accounts usually come up when two banks have no direct link and need a third bank in the middle to pass a payment along.

A mirror account (sometimes “mirror nostro”) is an internal record.

The bank that owns a nostro keeps a shadow copy of it in its own books, so it can track the foreign-currency balance day to day and match it against the correspondent’s statement.

So the full family is: nostro (ours), vostro (yours), loro (theirs), and the mirror (the internal copy of ours).

All describe positions in the correspondent banking network, not separate stores of money.

Nostro and vostro accounts let money move between two banks that sit in different countries and payment systems, without either bank opening a branch in the other’s country.

Here is the typical flow on a bank wire. Picture a services exporter in Bengaluru who has invoiced a US client for $2,000.

Step 1: Your client sends the payment

Your client instructs their US bank to pay $2,000 to your Indian account. The instruction travels over the SWIFT network; see how how SWIFT payment works for the full mechanics.

Step 2: The payment reaches your bank’s nostro

If the two banks have a direct relationship, the US bank credits your Indian bank’s dollar nostro account (a vostro from the US bank’s side).

If not, the payment hops through one or more intermediary correspondent banks that hold accounts with both.

Step 3: The SWIFT message carries the details

The payment message, often a SWIFT MT 103, carries the amount, currency, purpose and parties, so each bank knows how to book and forward the funds. Each bank is identified along the way by its SWIFT code.

Step 4: Your bank converts and credits you

Your Indian bank sees the dollars land in its nostro account abroad, converts them to rupees, applies a purpose code, and credits your account.

Every step relies on a nostro or vostro balance already sitting where it needs to be.

This is why, when a remittance is received in a nostro account, the money is inside India’s banking system before it reaches you: it sits in your bank’s overseas dollar account, waiting to be converted and passed on.

For the full inbound picture, our guide to foreign inward remittance walks through what happens after the funds arrive.

Nostro charges are fees that intermediary or correspondent banks deduct as your payment passes through their accounts, commonly $15 to $50 per transfer.

They are taken mid-transit, so a $2,000 payment often arrives as less than $2,000 worth of rupees. They are sometimes called correspondent charges or intermediary charges.

Two things eat into what you receive.

• Flat deductions in the chain: each intermediary bank that touches the payment can take a fee, commonly $15 to $50 depending on the banks involved. On a payment that passes through two correspondents, that can stack.
• The exchange-rate markup: your bank converts the arriving dollars at its own rate, usually marked up against the live mid-market rate (MMR). Banks quote a marked-up version of the non-public interbank rates, and that spread is a second, quieter cost. Our primer on the foreign exchange markup fee breaks the spread down.

Who pays the nostro charge depends on the fee instruction the sender picks on the wire.

A worked example, using an illustrative USD/INR rate of ₹95 (rates move, so treat this as a sample):

• You invoice $2,000. The client sends it SHA.
• Two intermediary banks deduct about $20 each, so roughly $40 in nostro charges comes off in transit. About $1,960 reaches your bank.
• Your bank converts at, say, ₹93.5 instead of the ₹95 mid-market rate, a spread of ₹1.5 per dollar. On $1,960 that spread is about ₹2,940.
• Net effect: you set out to receive ₹1,90,000 (at ₹95) and actually receive close to ₹1,83,260.

The gap is the nostro charges plus the FX markup.

For a fuller list of what banks levy on inbound money, see bank charges for foreign remittance and the specific correspondent bank charges that apply in the chain.

Yes. Every bank authorised to handle foreign exchange in India, known as an Authorised Dealer Category-1 (AD-1) bank, maintains nostro accounts abroad in the currencies it deals in.

That includes SBI and Bank of Baroda, and private banks such as HDFC, ICICI, Kotak Mahindra and Federal Bank.

You do not open or see these accounts yourself.

A search for a “Federal Bank nostro account” or a “Kotak nostro account” really points to your bank’s own overseas dollar or euro account, the one your inbound payment lands in before conversion.

As a customer, you interact with your ordinary Indian account; the nostro sits one layer up, inside the bank’s correspondent network.

Your choice of bank still affects your cost, because different banks hold different correspondent relationships and pass on different inward remittance or outward remittance charges.

A Special Rupee Vostro Account (SRVA) is a vostro account a partner foreign bank opens with an Indian bank to settle international trade in Indian rupees instead of dollars.

The Reserve Bank of India introduced the mechanism through a circular in July 2022, and as of 2026 the framework remains in force.

In an SRVA arrangement, an importer abroad pays in their currency, the partner bank converts and credits rupees into the special vostro account in India, and the Indian exporter is paid in rupees from that account.

It is the standard vostro idea applied to a policy goal: reducing dependence on the dollar leg for specific trade corridors.

For most services exporters the everyday dollar or euro vostro route still dominates, but SRVA is why “special rupee vostro account” and “RBI vostro account” appear so often in trade news.

If you are a services exporter, an IT or ITeS company, or an agency paid from abroad, the nostro and vostro machinery sits between you and your money whether you think about it or not.

Two takeaways matter.

First, the traditional bank-wire route is where most of the cost hides. The flat nostro charges in the correspondent chain and the FX markup on conversion together explain why your realised rupees fall short of the invoice.

Knowing the OUR/SHA/BEN mechanic at least lets you ask clients to send OUR where it makes commercial sense.

Second, you are not limited to the classic SWIFT-through-many-nostros path. Modern collection platforms route inbound payments more directly and convert closer to the mid-market rate, which reduces both the mid-transit deductions and the spread.

That is the model Xflow is built on for Indian exporters. You get a local receiving account, your client pays in their currency, and the funds settle to your Indian bank account, typically on the next business day (T+1).

Compliance does not break in the process. The platform issues your electronic Foreign Inward Remittance Advice (eFIRA) automatically and applies the correct RBI purpose code for inward remittance.

So downstream paperwork such as your FIRC vs FIRA documents and your GST and tax records stay intact.

Xflow holds final Payment Aggregator, Cross Border (PA-CB) authorisation from the RBI for both exports and imports (as of February 2026) and is ISO 27001 and SOC 2 certified.

That is the layer of trust that matters when the question is where your money sits while it moves.

Businesses moving off the pure bank-wire route keep more of what they are paid, because Xflow converts at the live mid-market rate with no markup added rather than a bank building its own spread into the rate.

The exact difference depends on your bank, currency and ticket size.

To weigh holding foreign currency yourself, see our EEFC account vs payment platform comparison.

For the tax angle once the money lands, our note on tax on inward remittances to India covers what applies.

Nostro reconciliation is the routine of matching a bank’s own record of its overseas balance against the correspondent bank’s statement of the vostro, so that every debit and credit lines up and nothing is stuck or double-counted.

For you as an exporter this is invisible.

But it is the reason a delayed inbound payment can often be traced: the funds are usually sitting, correctly recorded, in a nostro or vostro account somewhere in the chain, waiting on the next leg.

If your route runs on SWIFT, our guide to the SWIFT wire transfer explains how to follow a payment that has not yet arrived.

Nostro and vostro accounts are two views of the same cross-border banking relationship.

A nostro is “our account with you” in a foreign currency; a vostro is “your account with us” in the local currency; every nostro has a matching vostro.

Loro (theirs) and mirror (the internal copy) round out the family.

For Indian exporters the practical story is simpler than the vocabulary. Your inbound payment travels through these accounts, and the nostro charges and FX markup taken along the way are why you receive less than the invoice.

Understanding the route, and choosing a collection method that shortens it, is how you keep more of what you earn.