What is Nostro Account ?
- In simple terms, Nostro Account is an account of Indian Bank with an another bank in foreign country.
- These account are opened in foreign country with foreign bank and in the currency of that country.
- For Example: HDFC Bank having a Nostro Account with J P Morgan Chase Bank in US and in USD currency. Source: HDFC Bank
- Bank can more then one Nostro account for a particular currency based on its requirement.
- For Example: HDFC Bank for USD has nostro account with JPMorgan Chase Bank, Bank of New York, Bank of America, Wells Fargo Bank N.A, and Standard Chartered Bank. Source: HDFC Bank
- Currency to currency, there will different account either with same bank or different Bank.
- For Example: HDFC Bank for Eur has Nostro Account with JPMorgan Chase Bank, Barclays Bank PLC, Societe Generale, and Standard Chartered Bank. Source: HDFC Bank
- Nostro accounts are commonly used for currency settlement and Foreign Trades.
Nostro Account Relevance in Buyers Credit
Funding bank will transfer fund to Nostro account of LOU issuing bank on receipt of LOU.
What details are provided by LOU issuing bank to Funding Bank for Buyers Credit.
- Foreign Bank Name and Swift Address: For Example: J P Morgan & Chases Bank
- Local Bank Name and Swift Address : For Example : HDFC Bank
- Local Bank Account number with Foreign Bank (IBAN Number in case of EUR Nostro)
- Reference Number which Funding bank will have to quote at time of transferring fund to LOU issuing Bank
- Currency and Amount
- Value Date
Funding Bank Queries in relation to Nosto Account to LOU issuing Bank
- Nostro account details not mentioned
- Incomplete Nostro Account details provided
- Nostro account details provide of USD whereas transaction to be funded is in EUR/GBP etc.
- Nostro Account details of supplier provided whereas funding bank provides funding only to LOU issuing Bank
LOU Issuing Bank Queries in relation to Nostro Account during Buyers Credit Transaction.
- Funds not reflecting in Nostro
- Funds reflecting short in Nostro