Export essentials
Posted on May 30, 2025
Imagine you’re an Indian exporter. You just landed a huge USD order. Exciting, right? But then reality hits. You face forex delays, confusing reconciliations, and slower payments. It’s frustrating. You want the money in your hands fast, not stuck in some foreign bank somewhere.
Here’s where a Nostro account steps in. This little banking tool can make your life easier.
It helps you avoid those delays and get same-day settlements in INR. No more headaches. Just smooth cash flow.
Let’s break down what a Nostro account means and how it works for exporters like you.
Nostro Account Defined
The term Nostro comes from Latin. It means “our money held in your bank.” Imagine your Indian bank telling a foreign bank, “Hey, this is our money with you.” That’s basically what a Nostro account is.
It’s quite different from your current INR account. Your INR account holds Indian rupees and works for local transactions. However, a Nostro account holds foreign currency, such as USD or EUR, in a bank abroad.
The primary purpose of a Nostro account is to simplify cross-border payments and facilitate easier reconciliation. Instead of handling multiple steps and delays for each foreign payment, the bank uses this account to manage money overseas smoothly. Hence, this helps exporters get paid faster and clears up accounting headaches.
Nostro vs. Vostro – Why Both Matter
Let’s clear up the confusion between Nostro and Vostro accounts. They sound similar but mean different things.
A Nostro account is your bank’s foreign currency account held in a foreign bank. It’s like saying, “This is our money with your bank.”
A Vostro account flips that. It’s a foreign bank account held with your bank. So, your bank is holding their money.
Think of it this way: When your bank is using a Nostro account, it’s managing your money overseas. When a foreign bank uses a Vostro account, it’s managing their money with your bank at home.
Why should you, as an exporter, care? Because both accounts show up in your payment process. When you get paid in USD, your bank’s Nostro account receives the funds abroad. Meanwhile, the foreign bank’s Vostro account with your bank might handle related transactions.
Understanding both helps you see how money moves smoothly across borders. It also explains why payments sometimes get delayed or why reconciliation can be tricky. Knowing this gives you better control and patience when managing your export payments.
Why Exporters Choose Nostro Accounts?
If you export goods, Nostro accounts can be your best friend. Here’s why:
Faster foreign currency collection. Your bank gets paid directly in the foreign currency. No waiting for slow international transfers.
Instant clarity on incoming funds. You won’t face mysterious delays or missing payments. The funds show up clearly in the Nostro account.
Simplified reconciliation. Matching USD credits becomes a breeze. Your bank can easily track and settle payments without guesswork.
Here’s a quick example. A textile mill in Surat used to wait nearly two days for payment clearance. After their bank set up a Nostro account, they cut that lag by 48 hours. Faster money meant smoother operations and less stress.
If you want your export business to run like clockwork, a Nostro account helps you get there.
How a Nostro Account Works – Step-by-Step Flow
Here’s how your Nostro account keeps your export payments smooth:
Your client sends payment in USD to your bank’s Nostro account overseas.
The foreign bank records this as a credit in its Vostro ledger—basically, their record of your bank’s money.
Your Indian bank then debits its Nostro account and converts the funds.
Finally, your INR account gets credited the same day.
This means you get your money fast—ready to use for your working capital or business needs. No long waits, no confusion.
Setting Up Your Nostro Account in India
If you want a Nostro account, here’s what you need to know.
Several major Indian banks offer USD, EUR, and GBP Nostro accounts. Think of big names like SBI, HDFC, ICICI, and Axis Bank.
You’ll usually need to meet a minimum balance requirement. This varies, but be ready to keep a certain amount parked.
KYC paperwork is a must. Get your business documents and ID ready to speed things up.
Activation typically takes a few days to a couple of weeks. It depends on the bank and currency.
Key Features & Fees (Nostro Account Charges)
Nostro accounts come with a few costs to keep in mind.
There’s often a monthly maintenance fee plus per-transaction charges.
Watch out for forex spreads—banks earn from currency conversion margins.
Make sure your bank is clear about fees. Transparency is key.
Avoid hidden intermediary charges that pop up during cross-border payments.
Ask your bank to explain all costs before you sign up.
Compliance & RBI Guidelines for Nostro Accounts
When handling Nostro accounts, you must follow RBI rules closely.
Every inward remittance needs proper purpose-code tagging as per RBI guidelines. This helps track the reason for your foreign payments.
Banks and exporters must comply with FEMA reporting requirements. This keeps everything legal and transparent. For details, check out RBI’s Annexure II — it lists all purpose codes you’ll need.
Alternatives & Complementary Tools
Not ready for a full Nostro account? No worries.
Multi-currency wallets can sometimes fill the gap. They let you hold and send money in multiple currencies without a traditional Nostro setup.
Fintech solutions like Infinity’s multi-currency business account offer easy currency management with purpose-coded remittances.
They’re a modern, simpler alternative for many exporters.
Learn more about Infinity’s solution and how it works to make your export payments smoother.
Conclusion – Take Control of Your Export Payments
To wrap up, Nostro accounts give exporters real power. They speed up payments and cut through forex confusion.
What is your next step? Talk to your bank about setting one up. Or explore Infinity’s multi-currency accounts for a fresh, fintech-driven solution.
Ready to streamline your export receipts? Discover how Infinity’s purpose-coded, multi-currency accounts can be your modern Nostro alternative.
Frequently Asked Questions
What is a Nostro account?
It’s your bank’s foreign currency account held in a foreign bank. It helps manage cross-border payments smoothly.
How does a Nostro account work for exporters?
Your buyer pays into your bank’s Nostro account overseas. Then your bank converts and credits your INR account, often the same day.
What is the difference between Nostro and Vostro accounts?
A Nostro account is your bank’s account abroad. A Vostro account is a foreign bank’s account with your bank.
