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:
Which bank gives highest interest rate on saving account?
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.
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what is Nostro account?
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2022-08-19T17:05:44+00:00 2022-08-23T14:01:40+00:00Comment
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