Types of Foreign Currency Accounts

One of the important questions asked in bank interviews and banking awareness section of various banking exams is about types of Foreign currency accounts.

Types of Foreign Currency accounts

NOSTRO Account

NOSTRO Account means OUR account with YOU in Italian.

If SBI maintained an account with a bank abroad, say Standard Chartered, New York, in dollars – it’ll be known as a Nostro account.


So, it’s SBI’s account with/in Standard Chartered Bank (NY) in their local currency, which is dollars.

VOSTRO Account

VOSTRO Account means YOUR account with US.

If Standard Chartered Bank (NY) had an account with SBI (Mumbai), in our local currency that is Rupees, then this account of Standard Chartered will be called as Vostro Account by SBI (Mum)!

For Standard Chartered (NY), it’ll be a Nostro Account – because for them SBI (Mum) is a foreign bank, in a foreign country and rupees will be foreign currency!

Just give it a twirl – these concepts and it should be clear!

LORRO Account

LORRO Account: THEIR account with THEM!

If a 3rd party bank, in our case, say PNB, wanted to make some foreign currency transaction in $ – but it does not have a Nostro account/or, it does not have enough balance in its Nostro account – what can it do?

Since, SBI has Nostro account with Standard Chartered (NY and in $), it can ask for SBI’s help and use the $ in this account to conduct its transaction successfully.

So in effect, PNB is using SBI’s (THEIR) foreign currency account to transact with Standard Chartered (THEM)!

I hope these three terms are clear to you; pretty important from banking exam/interview point of view – I was asked in one interview and I knew!

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15 comments:

  1. Sir RBI marks are available. Please provide us the link to check the same. Thanks.

    ReplyDelete
    Replies
    1. http://rbi.org.in/scripts/resultsnew.aspx

      Delete
  2. Failed in rbi only 134. chandigarh
    reasoning 29
    Math. 38
    eng. 25.
    comp. 26
    Gk. 16

    ReplyDelete
  3. please ibps publish second list for reserve list and unreserve list candidates in ibps clerk 3 . dont delay in life of candidates there are many vaccancies.

    ReplyDelete
  4. Scored 153 in rbi but failed...:(

    ReplyDelete
  5. in all the bank vaccancies filled is low compared to vaccancies present for ibps clerk 3 please ibps give life i belong to poor family every time i pay rs 600 fee for exam and at last no job please give life ibps provide justice, please give life to persons not in reserve list this is humble request

    ReplyDelete
  6. Hi Raman,
    will you be publishing current affairs for the sbi associate po preparations... ie for the month of october..??

    ReplyDelete
  7. Raman/All,
    For RBI assistant- as per the details to be submitted at the time of interview, they have asked for NOC from current employer. I work with an IT firm and when contacted HR they said they would not provide such NOCs but will give the relieving letter on leaving the company, as this is the normal practice here.
    Will submitting the relieving letter if selected suffice, or will they be adamant on submitting NOC when appearing for Interview... pls help.. Is it mandatory for people working in private sector to produce NOC.. any help highly appreciated

    ReplyDelete
    Replies
    1. Relieving letter will as as NOC.

      NOC is not required in case of private companies.

      Delete
  8. i got 156 marks in rbi assistants hyderbad category :sc
    cut off is 148 is there chance of selection??????

    ReplyDelete

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