What is an Escrow account?

It is an account for keeping money that is the property of others. In other words, it’s a place where banks keep money assigned for a special task. For example, if you buy an under-construction apartment and deposit the money in such an account, the bank will release it to the contractor, depending on how much work is completed.

What are Nostro and Vostro accounts?

A Nostro account is one that a bank holds with a foreign bank. For example, ICICI bank has opened a Nostro account with HSBC bank in the UK. These accounts are generally in the currency of the foreign country that allows for easy cash management since currency doesn’t need to get converted.

Similarly a Vostro account is the opposite of Nostro. Here, the local currency is maintained by a local bank for a foreign correspondent bank. Of course, for the foreign bank it becomes a Nostro account.