What is Nostro Account?
"Nostro" comes from the Latin for "ours". A nostro account is "our account with you": an account that a bank in India keeps with a bank abroad, held in the foreign currency. For example, an Indian bank might keep a US dollar nostro account with a bank in New York and a euro nostro account with a bank in Frankfurt. When foreign money is sent to an Indian customer, it usually lands first in the Indian bank's nostro account, and the bank then credits the customer in India.
Why it matters for exporters
You will rarely see the word nostro on a statement, but it explains how your export payments travel. When a US client pays you USD 10,000, the money moves into your bank's dollar nostro abroad. Your bank receives the SWIFT message, converts the dollars at its rate (unless you hold an EEFC account) and credits your account in India. If the client's bank and your bank's nostro bank do not have a direct relationship, an intermediary bank sits in between, which can add charges and time.
Some banks ask foreign remitters to specify the nostro or correspondent bank in the payment instructions. If your bank gives you such details, include them on your export invoice to reduce delays.
Example
Opal Systems Pvt Ltd invoices a US client USD 12,000. Its bank's instructions name a New York correspondent where the bank holds its dollar nostro account. The client pays to that bank for credit to Opal's bank, quoting Opal's account number. The funds reach the nostro, and Opal's account in Pune is credited ₹10,44,000 the next working day.
Common confusion
Nostro and vostro describe the same type of account from two sides. Your bank's account abroad is its nostro; a foreign bank's account with your bank is a vostro. As an exporter you do not open or operate either.