WORD ORIGIN Latin word: A Vostro account is an account that a domestic bank holds for another foreign bank in the domestic bank's currency. "Vostro" is from the Latin "Voster", meaning "your" Nostro meaning “Ours”. Ad valorem is an adjective that describes a tax charged at the estimated value of the goods being charged, and is the Latin for "according to value".
A Nostro account
is used when one bank has money deposited in an account opened with another
bank to execute international transactions.
Vostro Account
refers to an account held by a foreign-based bank in the domestic currency with
the domestic bank of the country
As both banks
keep records of the amount of money deposited in the account, this leads to two
mirroring sets of ledger known as the Nostro and Vostro account.
Example:
Suppose City Bank
(USA based bank) opens an account in SBI BANK (India based bank) with the
Currency INR (Indian Rupee), then this type of accounts is called Vostro
Account.
Conclusion:
Thus single conclusion can be drawn from the above definitions of both Nostro and Vostro
accounts.
If SBI bank opens
a bank account in City Bank, it will be a Nostro Account for SBI Bank and from
the City Bank’s point of view, it would be a Vostro Account.
Source:
https://www.thesisbusiness.com/
