I can explain the nostro account meaning to you as I read about it when I was planning to visit Canada. In simple words, a Nostro account is an account that one bank holds in another bank in its home currency. This process is withheld for simplifying foreign exchange & trading transactions.
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What is Nostro Account with Example
Let’s say a bank ‘X’ in India holds an account with Bank ‘Z’ in Canada. And the currency in bank X’s bank account in Bank Z is maintained in Canadian Dollars. Now, this account with Bank Z is referred to as a Nostro Account for Bank X.
You’ll mostly see such accounts in Exim-related banks that deal with a wide number of overseas transactions and in large amounts. Thanks to a Nostro account, transactions within the country initiated by bank X become as simple as transferring funds from one account to another. These transactions are facilitated by Bank Z in its home currency. This process helps save a lot of hassle.
Let’s say the entity opening the account or the bank X itself isn’t physically present in another country (Canada in this case), it can still open an account and carry out required transactions.
Other Features:A Nostro account is an additional feature generally available in countries with convertible currencies. In case there aren’t convertible currencies, banks tie up with 3
rd
parties for enabling such transactions.
Since a Nostro account is an additional feature, banks with Nostro facilities charge maintenance fees that may be too costly.
A Nostro account is different from a deposit account—A Nostro account is held in the currency of bank Q’s presence whereas a demand deposit account is held in the currency of bank X’s existence.
Read more:
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What is the difference between NRE And NRO Account?
Can I deposit money in NRE account from India?
How to Withdraw Money from NRE account?
This is all you need to know about the Nostro account meaning.
what is Nostro account?
Garima
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2022-08-19T17:05:44+00:00 2022-08-23T14:01:40+00:00Comment
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