Q. Consider the following statements with reference to Vostro Accounts:
1.It is an account that a correspondent bank holds on behalf of another bank.
2.Vostro accounts are maintained in the foreign currency whereas Nostro accounts in domestic currency.
3.Vostro account serves as an economic way for small domestic banks to access the financial resources and services of a larger foreign bank.
Which of the statements given above are correct?

[A] 1 and 2 only

[B] 2 and 3 only

[C] 1 and 3 only

[D] 1, 2 and 3

Answer: C
Notes:

Statement 1: Vostro Accounts is an account that a correspondent bank holds on behalf of another bank. It is the account held by domestic banks for the foreign banks. For example – HSBC vostro account being held by SBI in India.

Statement 2: The statement is incorrect. Vostro accounts are maintained in the domestic currency whereas Nostro accounts in foreign currency.

Statement 3: Vostro account serves as an economic way for small domestic banks to access the financial resources and services of a larger foreign bank.

Source: The Indian Express