Nostro, Vostro and Loro Accounts
Ours, yours, theirs: the same correspondent account, named from different sides.
Banks cannot move currencies across borders on their own; a dollar can only sit in a bank in the US dollar system. So an Indian bank keeps dollar accounts with correspondent banks abroad, and foreign banks keep rupee accounts with banks in India. Nostro, vostro and loro are simply names for these accounts, depending on whose point of view you take.
Every inward and outward remittance, export realisation and import payment a branch handles settles through one of these accounts. That is why FEDAI's rules on the rate to apply and the time to pay all run from the date the nostro is credited.
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The Three Names, From an Indian Bank's Side
Nostro
Latin sense
Ours
Meaning
Our account with you: the Indian bank's foreign currency account held abroad
Example
An Indian bank's USD account with its correspondent in New York
Vostro
Latin sense
Yours
Meaning
Your account with us: a foreign bank's rupee account held in India
Example
A foreign bank's INR account with an Indian bank
Loro
Latin sense
Theirs
Meaning
Their account with you: a third bank's account, referred to when two banks talk about it
Example
Bank A telling Bank B about Bank C's account with Bank B
| Term | Latin sense | Meaning | Example |
|---|---|---|---|
| Nostro | Ours | Our account with you: the Indian bank's foreign currency account held abroad | An Indian bank's USD account with its correspondent in New York |
| Vostro | Yours | Your account with us: a foreign bank's rupee account held in India | A foreign bank's INR account with an Indian bank |
| Loro | Theirs | Their account with you: a third bank's account, referred to when two banks talk about it | Bank A telling Bank B about Bank C's account with Bank B |
How an Export Payment Moves Through the Accounts
- 1
Buyer pays
The overseas buyer's bank debits the buyer and pays the Indian bank's nostro with its correspondent.
- 2
Nostro credited
The correspondent credits the nostro and sends a credit advice or statement.
- 3
Indian bank books it
The Indian bank credits its mirror account and converts at TT buying rate or the forward contract rate (FEDAI Rule 2.5).
- 4
Exporter credited
Funds must reach the exporter's account within two working business days of the nostro credit and compliance; delay attracts compensation.
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Indian Rules That Touch These Accounts
- check_circleInward remittances: pay or intimate the beneficiary within two working business days of the credit advice or nostro statement; delay attracts interest at 2% over the bank's savings rate (FEDAI Rule 4.5).
- check_circleVostro transfers between banks in India: the remitting bank sends Form A3 separately, due within 5 working business days; delay costs ₹1,000 per day, with the claim capped at ₹10,000 if lodged after 15 days (FEDAI Rule 4.6).
- check_circleNostro balances: banks may hold foreign currency balances up to Board-approved levels and place surpluses overnight or invest them abroad within approved limits (RBI Master Direction, Part C).
- check_circleNostro overdrafts: overdrafts not adjusted within five days count towards the bank's overseas borrowing limit of 100% of unimpaired Tier I capital or USD 10 million, whichever is higher.
How CCFE Tests This
Most questions are viewpoint tests: "an Indian bank's dollar account in New York is a ___ account" (nostro) or "a foreign bank's rupee account with an Indian bank" (vostro). The trap is answering from the foreign bank's side. Loro catches people because it involves three banks. Applied questions ask when conversion happens for export collections: only after the nostro is actually credited.
FAQs
What is the difference between nostro and vostro accounts?expand_more
Same account, two viewpoints. To the bank that owns it, an account held abroad in foreign currency is a nostro (ours with you). To the bank holding it, the same account is a vostro (yours with us).
What is a loro account?expand_more
"Their account with you": the term two banks use when referring to an account a third bank holds with one of them.
What is a mirror account?expand_more
The record a bank keeps in its own books of its nostro account, used to reconcile its entries against the correspondent's statement.
Do banks need RBI approval to open a Special Rupee Vostro Account?expand_more
Not any more. RBI's circular of 5 August 2025 allows AD banks to open SRVAs of overseas correspondent banks without referring to RBI.
Next steps
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