What are nostro and vostro accounts?

Nostro means "ours" and vostro means "yours". Bankers use the words to say whose account sits in whose books. A service exporter never opens either one, but every SWIFT payment and every rupee-settled export depends on them.²

What do nostro and vostro accounts mean in simple words?

Nostro and vostro accounts are the accounts banks keep with each other so that money can move between countries. A nostro account is an Indian bank's account with a bank abroad; a vostro account is a foreign bank's or exchange house's account with a bank in India.²

• Nostro: "our account with you", usually in foreign currency.²
• Vostro: "your account with us", held with a bank in India.²

For example, when a client in Chicago pays a dollar invoice by SWIFT, the dollars are credited to your Indian bank's dollar account with a bank in the US, which is your bank's nostro account.²

Why do nostro and vostro accounts matter for Indian exporters and freelancers?

Nostro and vostro accounts matter because they decide when your bank can credit you and how rupee-settled exports are paid.¹²

• Bank compliance: an AD bank credits rupees only after confirming that its nostro account has been credited with the counter-value in foreign currency.²
• Rupee invoicing: under RBI's July 2022 framework, exports may be invoiced in rupees and paid from a Special Rupee Vostro Account.¹
• Realisation period: exports invoiced or settled in rupees have twelve months to be realised under the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2026, against nine months for foreign currency invoices.³

Understanding the accounts helps when you ask your bank where a payment is.

How do nostro and vostro accounts work?

Nostro and vostro accounts work as mirror entries: the same account is a nostro to one bank and a vostro to the other.²

RBI's Master Direction on vostro accounts of non-resident exchange houses describes AD Category-I banks opening and maintaining vostro accounts for overseas exchange houses, and refers throughout to the AD bank's own nostro accounts.² Your bank then credits you in rupees, or in foreign currency if you hold an EEFC account.²

How do you use or check a payment through a nostro account?

You check a payment by asking your bank to trace it against its nostro account. A dollar wire may pass through one or more correspondent banks before it reaches your bank's nostro account, and each step can add time.²

• Reference: give the bank the SWIFT reference so it can check its nostro account.²
• Credit timing: the rupee credit to you follows only once the nostro credit is confirmed.²

For rupee trade settlement, your bank pays you from the partner bank's Special Rupee Vostro Account.¹

What is the difference between a vostro account and a Special Rupee Vostro Account?

A Special Rupee Vostro Account (SRVA) is a rupee vostro account that an AD bank in India opens for a correspondent bank of a partner trading country under RBI's A.P. (DIR Series) Circular No. 10 dated 11 July 2022.¹²

Under the SRVA framework, Indian exporters "shall be paid the export proceeds in INR from the balances in the designated Special Vostro account".¹ For an IT consultancy or engineering firm, the money never leaves rupees.¹

What do people get wrong about nostro and vostro accounts?

People often think an exporter needs its own nostro account to receive foreign money. Nostro accounts belong to banks, and your bank credits you from its own nostro credit.²

• Transit time: a payment "in transit" may be sitting with a correspondent bank before the nostro credit.²
• Rupee invoices: rupee settlement through an SRVA is a separate framework from ordinary SWIFT receipts.¹

Which terms are related to nostro and vostro accounts?

These terms describe the banks and messages that move money through nostro and vostro accounts:

• Correspondent bank: a bank that holds accounts for other banks and passes payments on.
• SWIFT code: the identifier banks use to route international payments.
• Authorised Dealer bank: the Indian bank whose nostro account receives your client's money.²
• Special Rupee Vostro Account: the rupee account used for trade settlement with partner countries.¹
• Export invoicing in INR: how rupee invoicing works for exporters.¹