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Sujai Adithya
Business Development and Banking & Financial Services Expert
Asked a question last year

What are the differences between NOSTRO, VOSTRO and LORO accounts?

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Sujai Adithya
Business Development and Banking & Financial Services Expert

NOSTRO Account: NOSTRO account refers to an account that a domestic (Indian) bank holds in a foreign currency in a foreign bank, frequently used to facilitate foreign exchange and trade transactions. For example, if a domestic bank like Bank of India has a US Dollar account with ICICI Bank, then such account is called as NOSTRO Account.

VOSTRO Account: VOSTRO account refers to an account that a foreign bank holds in INR in a bank that is based in India. For example, if a foreign bank like Deutsche Bank has an INR account with Bank of Baroda, then such account is called as VOSTRO Account.

Let’s say, HDFC Bank in India, wants to make and receive payments in US Dollars, in the US. It will tie up with, say, Citibank in the US. Citibank will act as its representative or ‘correspondent’ bank. HDFC Bank will have an account in Citibank, US – its USD receipts and payments will happen from this account. This account is HDFC’s 'NOSTRO' account and Citibank’s 'VOSTRO' account.

Loro Accounts: Loro accounts are generally held by a 3rd party bank, other than the account maintaining bank or with whom account is maintained. For example, BOI wants to transact with HSBC, but doesn’t have any account, while SBI maintains an account with HSBC in U.K. Then BOI could use SBI account.