CURRENT AFFAIRS

Detailed explanation-1: -A vostro account is an account a correspondent bank holds on behalf of another bank. These accounts are an essential aspect of correspondent banking in which the bank holding the funds acts as custodian for or manages the account of a foreign counterpart.

Detailed explanation-2: -A Vostro account is defined as an account that a correspondent bank holds on behalf of another bank. Vostro is a Latin word that means “your”, therefore, a vostro account implies that it is “your account”. An example of such an account would be HSBC vostro account is held by SBI in India.

Detailed explanation-3: -Nostro and vostro are used to differentiate between the two sets of accounting records kept by each bank. Nostro comes from the Latin word for “ours,” as in “our money that is on deposit at your bank.” Vostro comes from the Latin word for “yours,” as in “your money that is on deposit at our bank."

Detailed explanation-4: -’ In bilateral correspondence between any two given banks, the words Vostro (Your) and Nostro (Our) are used, that is, the bank whose book the account is maintained and the one who is maintaining the account. In such conditions, a third bank’s account, which is talked about, is called a Loro account.

Detailed explanation-5: -For example, assume that Bank X maintains an account in Bank Y’s home currency. To Bank X, the account will be treated as a Nostro account, while Bank Y will treat the account as a Vostro account.