Nostro and Vostro account normally uses in the foreign
exchange transactions of the banks or during currency settlement.
Nostro Account means the overseas account which is held by
the domestic bank in the foreign bank or with the own foreign branch of the
bank. For example the account held by Bangladesh Bank with bank of America in
New York is a Nostro account of the Bangladesh Bank.
Vostro Account means the account which is held by a foreign
bank with a local bank, so if bank of America maintains an account with
Bangladesh Bank it will be a vostro account for Bangladesh Bank.
It
is a great point that the account which is Nostro for one bank is Vostro for
another so when Bangladesh Bank opens a Nostro account with Bank of America, it
is a Vostro account for them and vice versa.