What is a nostro account?

An account held by a bank in another bank in a different country is called a nostro account. This account, which deals in the currency of the host bank, is usually kept to facilitate medium to large transactions in international trade. A nostro account helps simplify transactions for the banks involved as bank-to-bank transfers are easily made. The host bank charges some fees and costs for providing the other bank fund maintenance and other services. A core advantage of a nostro account is that it helps in easy payments to third-party in the host bank's country, for example to pay an exporter based in the host bank's country.