What is a Nostro account

A Nostro account is a bank account held in a foreign country by a domestic bank, denominated in the currency of that country. Thus a Nostro account is your account in a different country. A Nostro account is always in foreign currency.

For example, if you live in the South Africa and ask your local bank to set up a American account for you, they will most likely open a "Nostro Account" with a correspondent agent bank in the United States that they have a banking relationship with for that specific purpose. The US bank will set up the account, but it is not a typical checking account.

These accounts are treated differently on the books of the bank. Transactions to and from these accounts may only be wire transfers, using SWIFT, to ensure identity credentials are monitored and that special handling is used. Generally, companies will use these types of accounts when they often either buy or sell in another country but do not have a physical presence that would afford them usage of a typical checking account arrangement.