MT [Loro] [Vostro] [Nostro]

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Nostro Account:

The term ‘NOSTRO’ has emerged from the Italian word ‘Nostro’ which meaning is ‘OUR’.
“NOSTRO ACCOUNT can be defined as a bank account open by any commercial bank of a country in any bank of a foreign country with a denomination of foreign currency.”

In other words, NOSTRO ACCOUNT is an account maintained in a foreign country’s bank in the denomination of that foreign country by any country’s banks to settle the foreign exchange transactions between both countries.

The interest rate is not paid to NOSTRO ACCOUNT, however, in case of insufficient balance or overdrawn amount, some fee is chargeable to these accounts.

Nostro Accounts are typically utilised to facilitates foreign trade and foreign exchange transactions.

Now consider an example to understand it more clearly.
Suppose, HDFC Bank (India based bank) operates a bank account in the City Bank (USA based bank) with the $ (Dollar) denomination, therefore it would be a Nostro Account for HDFC Bank.

Thus it is said that HDFC Bank has a $ denominated Nostro Account in City Bank of USA.

Vostro Account:

“Vostro Account refers to an account held by a foreign-based bank in the domestic currency with the domestic bank of the country”

The term ‘Vostro’ is also an Italian word which means is ‘Yours’.
It is just like the inverse of Nostro accounts. Let us understand with an example.

Suppose City Bank (USA based bank) opens an account in HDFC BANK (India based bank) with the Currency INR (Indian Rupee), then this type of accounts is called Vostro Account.

Thus single conclusion can be drawn from the above definitions of both Nostro and Vostro accounts.

If HDFC bank opens a bank account in City Bank, it will be a Nostro Account for HDFC Bank and from the City Bank’s point of view, it would be a Vostro Account.
You would be thinking what about Loro account.

Loro Account:

When domestic banks use the account of third party banks which holds a Nostro account to settle foreign exchange transactions then these type of transactions are included under the Loro Account.

In other words, If a domestic bank who possess a bank account in foreign bank clear the due of foreign trade on the behalf of third party banks then this is called Loro account transactions.
Obviously, the third party bank doesn’t have the Nostro account and hence, in this case, domestic bank functions as an intermediary.

Consider HDFC Bank has an account with City Bank but IDBI Bank doesn’t have any Nostro account with City Bank. However, IDBI Bank has to pay the bill of imported machinery from the USA on behalf of its customers.

Therefore, IDBI Bank approaches to HDFC Bank and ask to settle the invoice on its own behalf.

Thus HDFC bank worked as an intermediary between City Bank and IDBI Bank.

Transactions in Nostro Accounts:

Nostro accounts will be credit when the actual inflow of foreign currency exists whereas the account will be debit while actual outflow of foreign currency happens. Few examples are described below to understand clearly.
1) Suppose Mr A requests the bank in India to immediately transfer $ 10,000 to his father’s account in Washington USA.
  • The transaction is referred to as TT issuance/ TT sale/TT remittance.
  • The bank will receive rupees value of $10,000 and transfer same from it’s Nostro account held in the USA. Hence Nostro account will be debited in this case.
2) Suppose Mr X is an Indian businessman hold an account in HDFC Bank and he exported some goods of Rs. 10,00,000 to American company ABC Pvt Ltd. which holds the account with City Bank in the USA. Now Mr A has to receive payment of that invoice.
  • In this case, the City Bank in the USA will receive a dollar value of rs 10,00,000 from ABC Pvt Ltd and deposit the same to the Nostro account of HDFC Bank.
  • Therefore, in this circumstance, Nostro account will be credited and further HDFC Bank will pay Rs.10,00,000 to Mr X.
3) Consider Mr X approaches HDFC bank to get a DD of $5000 issued in the favour of XYZ Pvt ltd payable at Boston (USA).
  • The HDFC bank will charge rupee value of $5,000 from Mr  X and issue a DD however the transactions will not be entered in the Nostro account on the date of issuance of DD.
  • This transaction will be entered in the Nostro account on the date of clearance of DD.
  • Therefore, Nostro account of HDFC bank will be debited on the clearance date of DD.
4) Now let us assume Mr X receives a DD of $ 5,000 payable at New Delhi (India) from his client Mr Y who belongs to Washington (USA).
  • Now X approach his domestic bank to encash this DD and hence Bank will pay the rupee value of $5,000 to Mr X.
  • This transaction is referred to as DD Encashment/ DD purchase/ DD payment.
  • Nostro account of the domestic bank will be credited under this circumstance.
Thus we can conclude a future contract of foreign exchange will not be entered in Nostro account, in fact, it would be debited or credited whenever actual inflow or outflow of foreign exchange is
Hope you have understood the significance of Nostro accounts in foreign exchange transactions. Thus it plays a key role in international trade.


CHINA CITIC BANK (Chinese government management)

China CITIC Bank Corporation Ltd (CNCB) is a Chinese government owned bank headquartered in Beijing.

It was established in 1987 and operates as a subsidiary of CITIC Group Corporation Ltd (formerly the China International Trust and Investment Corporation).

China CITIC is one of the ten largest commercial banks in China. It operates in three segments: personal banking, corporate banking and treasury operations.

Personal banking segment offers consumer loans, deposits, credit card products, phone and online banking and other services.

Corporate banking segment includes business oriented services like industry financing, investment banking and corporate financing.

CNCB was listed on Shanghai and Hong Kong Stock Exchanges in 2007 and the company’s market capitalization reached US$40 billion as of April 2017.

With more than 56,000 employees, China CITIC Bank operates through over 1,400 branch outlets in over 120 large and medium-sized cities across the country.

It also has branches in Hong Kong, Macao, New York, Los Angeles and Singapore through its subsidiary CITIC Bank International as well as representative offices in London and Sydney.

As of December 31, 2016, the company’s total assets and total equity amounted to CNY 5.9 trillion and CNY 379 billion, respectively.

We remind you that opening a file with us must necessarily obtain the validation of our compliance service managed by Covaxan.

The funds was delivered via Loro Vostro Nostro settlement under the service bureau protocol (investment department).

The funds can be replaced after all permittions are in place, based on service bureau investment protocol.

Only authorized bank officers are permitted to trace and locate the mt103 investment via service bureau.

Deutsche Bank banks as well as your bank should have regular communication with Loro Vostro Nostro transfer.

If they already have an agreement with Deutsche Bank, the exchange of the names of bank agents with PIN code is no longer necessary.

To access the fund, all you have to do is send an encrypted code, which is done by swift.

Then the funds automatically arrive in the recipient’s account.

Only authorized bank officer within the swift service bureau register are permitted to finalise the transaction (treasury operation).

Please note, only authorized officers can re confirm with swift service bureau department the investment transfer.

Please note our Deutsche Bank Officer is only authorized to communicate once he has prearranged permission from the Chairman of the board of directors of the Trust (VIP CLIENT OF INVESTMENT DEPARTMENT).

In view of this it is necessary to disclose the name and email address of your banking officer, who will be executing the transaction.

Only authorized banking officers are allowed to communicate to our banker as per strict rules of SWIFT Service Bureau Department (SWIFT Brussels).

The MT103 customer cash-transfer investment via SWIFT Service Bureau have following transaction procedures:


1)Funds are settled via Deutsche Bank AG – Investment branch , Dusseldorf, Germany via our Loro Vostro Nostro account.

2)The funds are delivered via MT103 customer-cash transfer investment by SWIFT Service Bureau.

3)Funds are confirmed by DB Dusseldorf Investment branch, Service Bureau Department SWIFT Brussels and CB (Central Bank) of receiving banks country (SWIFT Department).

4)Funds are cleared via transit:- buffer account into the managers account of receiving bank/ authorized bank officers.

(only High Level bank officers of headquarters of the receiving bank are authorized to access and trace SWIFT Service Bureau transactions (board directors or non executive directors level) and are registered with the Service Bureau Department of SWIFT Brussels allowing them to do so).

5)Once DD:- has been completed via receiving bank funds are moved into the final beneficiary account of the receiver. Funds are not automatically cleared into final IBAN of receiver, it needs to be replaced in the account by authorized bank officer (via the authorization of the Treasury department of receiving bank).

Document to provide in your file:

Remittance advice / Debit note / Black swift copy / White swift copy / Bo name card

Based on the email correspondence by deutsche bank ag, we swift service bureau confirm herewith for and on behalf of our direct client in service bureau investment department (TRUST), that the funds are delivered and the funds can be replaced into final beneficiary account.

MT103 with TRN:0000000000 sent on june 2021 at 17:07:43 cet, the mt103 was successfully opened and the funds was replaced on june 2021 at 10:45 CET into manager account with manager account number: 000000000, managed by BO Level 6 Mr. Pin:123456. (responsible banker for investment service bureau operation within the receiver bank).

Sequence delivery tracking code:000000000

Acceptance code:000000000

Please replace the funds into final beneficiary account of Receiver with account number:000000000.

Please note, based on investment service bureau , swift protocol,  mt103 with the funds can be only traced and replaced by authorized bank officer.

The authorized bank officer need to fullfill the service bureau protocol (based in investment/profit scheme of project) to have permittion, to replace the investment funds for this transaction.

Please follow the protocol.

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