2. Nostro account
o When a bank maintains its foreign currency account in a bank in a foreign country in the
local or home currency of that country it is called a “Nostro” account.
o For example. when an Indian bank( State Bank of India) maintains its US $ account in a (
Bank of America) in the USA it is called a Nostro account of the Indian bank.
3. Vostro account
o When a bank maintains a local or home currency account of a foreign bank in its own
country it is called a “Vostro” account.
o For example. For example when an Indian bank( State Bank of India) maintains a ₹(Indian
Rupees) account of a( Bank of America) of the USA in India.
4. Loro Account
o Loro account is maintained by one domestic bank on the behalf of other domestic
banks in a foreign bank denoted in foreign currency. It means ‘their money.
o For example, if Bank of Baroda asks State Bank of India to open a bank account with
Citi Bank New York it would be a Nostro account for State Bank of India and a Loro
account for Bank of Baroda.
5. Advantages:
o Executing large foreign exchange transactions.
o Minimizes time for transfer of funds.
o Risk-free.
o Easy to operate.
o Rupee stability.
