Nostro, Vostro and Lostro are the most commonly used terms in forex markets. For dealing in forex market, Indian branch should have a current account with the foreign bank dealing in respective currency of that country. When Indian branch opens an account with the foreign bank, in the books of Indian branch it is a Nostro Account. Similarly in the books of Foreign Branch it will be a Vostro Account. A single account is both Nostro and Vostro at the same point of time. Notro Account: Nostro Account is a current account maintained by a domestic banker/dealer with a foreign bank in foreign currency. Example: Current Account of Axis Bank (an Indian Bank) with London Bank (Foreign Bank) in Pound currency is a Nostro Account. Vostro Account: Vostro Account is a current account maintained by a foreign bank with domestic bank in Rupee currency. Example: Account of London Bank in India with Axis Bank in Rupee currency. Lostro account: Lostro Account is a current account maintained by one domestic bank on behalf of other domestic bank in foreign bank in foreign currency. In other words lostro account is a Nostro Account for one bank who opened the bank and loro Account for other bank that refers first one account. Example: Axis bank opened current account with the London bank. If HDFC refers that account of Axis bank for its correspondence, then it is called LOSTRO Account for HDFC and it is Nostro account for Axis Bank. Accounting Effect: A bank counts Nostro Account with a debit balance as a cash asset in its balance sheet .On the other hand a Vostro account with a credit balance (i.e. a deposit) is a liability, and a vostro with debit balance is an asset. Thus in many banks a credit entry on an account is regarding as negative movement and a debit is positive – the reverse of usual commercial accounting conventions.