Nostro and Vostro Account
This query is : Resolved
16 June 2016
Dear sir,
What are the meaning of Nostro & Vostro Account and for what purpose they are used.
19 June 2016
A nostro account will be in foreign currency (it is a record of money held by a bank in another country in the currency of that country) i.e. a bank in country A keeping a record of money held by a bank in country B, in the currency of country B.
A vostro account will be in the local currency of the bank where the money is being held i.e. it is the bank in Country B's record of the money kept by the bank from country A with it.
Usage:
[edit]
Nostro accounts are mostly commonly used for currency settlement, where a bank or other financial institution needs to hold balances in a currency other than its home accounting unit.
For example: First National Bank of A does some transactions (loans, foreign exchange, etc.) in USD, but banks in A will only handle payments in AUD. So FNB of A opens a USD account at foreign bank Credit Mutuel de B, and instructs all counter-parties to settle transactions in USD at "account no. 123456 in name of FNBA, at CMB, X Branch". FNBA maintains its own records of that account, for reconciliation; this is its nostro account. CMB's record of the same account is the vostro account.
A vostro account will be in the local currency of the bank where the money is being held i.e. it is the bank in Country B's record of the money kept by the bank from country A with it.
Usage:
[edit]
Nostro accounts are mostly commonly used for currency settlement, where a bank or other financial institution needs to hold balances in a currency other than its home accounting unit.
For example: First National Bank of A does some transactions (loans, foreign exchange, etc.) in USD, but banks in A will only handle payments in AUD. So FNB of A opens a USD account at foreign bank Credit Mutuel de B, and instructs all counter-parties to settle transactions in USD at "account no. 123456 in name of FNBA, at CMB, X Branch". FNBA maintains its own records of that account, for reconciliation; this is its nostro account. CMB's record of the same account is the vostro account.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Taxable or Tax exempt
- CAPITAL GAIN BASE ON NOTIFICATION
- TDS Deducted AY-2013-14 Not Reflected in 26as
- ADVANCE PAYMENT OF ADVOCATE
- Demand Outstanding AY 2013-14 TDS Deducted not shown in 26as
- FAST-DS 2026 Under Tax Law - No recourse or support for person declaring via this scheme?
- GST rate and HSN code for sale of racing horses
- Eway bill generation from place other than registeted
- REGARDING ANNUAL RETURNS FILLINGS OF A COMPANY INCORPORATED ON 28.03.2025
- TDS Return Q1 FY 2026-27
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
