There are various type of foreign account mentioned in below:
- NOSTRO Account
- VOSTRO Account
- LORRO Account
Here we are giving full details regarding all about for foreign bank accounts. Here interested students can download full details about NOSTRO account, VOSTRO Account and LORRO account on our website.
Definition: NOSTRO account at a foreign bank where a domestic bank keeps reserve of a foreign currency. A bank keeps a nostro account so that is does not have to make a currency conversion should an account holder make a deposit or a withdrawal in that foreign currency.
In simple way about NOSTRO Account:
- NOSTRO Account in simple way OUR account with you in Italian.
Like example, A U.S bank may have nostro account with one more Canadian banks. These types of account will be denominated in Canadian dollars, which enable efficient settlement of transactions that are Canadian dollar denominated. It will be also minimize the exposure of the U.S bank to undue exchange rate risk.
- The main definition of VOSTRO account , Local Currency account maintained by a local bank for a foreign bank.
- Other way you can say, the account that that a correspondent bank, usually located in the US or U.K, holds in behalf of a foreign bank. It is one in which the domestic bank act as custodian or manages the account of a foreign counterpart.
VOSTRO Account means your account with US.
- For example Slandered charted bank New York had an account manage with State bank of India, in our local currency that is rupees, and then this account of standard charted will be called as VOSTRO Account by State bank of India (SBI) Mumbai.
- NOSTRO (Our) and VOSTRO (Your) are used in the bilateral correspondence between the concerned two banks in the bank maintained the account and the bank whose book the account maintained. In such correspondence when third bank account referred it is called as LORRO account.
- For instance, WXY bank of India is maintaining an account with ABC bank in New York USA in USD when PQR bank of India refers the said account in correspondence with XYZ bank, Now these type of account called as LORRO account.
LORRO Account means THEIR ACCOUNT WITH THEM