Nstro, Vostro And Mirror s 3f233l

International Banking

By: Prerna MBA Weekend (B&I) Fourth Semester

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Nostro and Vostro are ing used to distinguish an held for another entry from an another entity helds. The word Nostro means “ours” and Vostro means “yours”. These words are derived from latin. A bank counts Nostro with a debit balance as cash asset in its balance sheet. Conversely, a Vostro with a creadit balance (i.e. Deposit) is a liability, and a vostro with a debit balance (a loan) ia an asset. Thus, in many banks a credit entry on an (“CR”) is regarded as negative movement and a debit (“DR”) is positive- the reverse of usual commercial ing convention.

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Nostro is an denominated in a foreign currency established through your local bank at a bank in the respective country of the currency desired. The "nostro" and "vostro" are derived from Latin meaning "ours" and "yours" respectively. A nostro is our in a different country and a vostro is a foreigner's in our country. A nostro is always in foreign Currency while a vostro is in Home currency. (thanks P Goyal for the fb comment)

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For example, if you live in the United States and ask you local bank to set up a Euro for you, they will most likely open a "Nostro " with a correspondent agent bank in the European Union that they have a banking relationship with for that specific purpose. The Euro bank will set up the , but it is not a typical checking . These s are treated differently on the books of the bank. Transactions to and from these s may only be wire transfers to ensure identity credentials are monitored and that special handling is used. Generally, companies will use these types of s when they often either buy or sell in another country but do not have a physical presence that would afford them usage of a typical checking arrangement.

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held by a foreign bank in a domestic bank is called vostro .

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held by a foreign bank in a domestic bank is called vostro . A Vostro is our of your money, held by us. A Vostro is a credit balance (i.e. A deposit) is a liability, and a vostro with a debit balance (a loan) ia an asset. For example UBS of Switzerland opening an in SBI in India, this is vostro for SBI India.  For example UBS of Switzerland opening an in SBI in India, this is vostro for SBI India.

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Mirror ing is used in European countries that require changes in inventory to be immediately reflected in the income statement. With mirror tables, you can combine the creation of balance sheet inventory entries with the creation of related entries to income statement s by associating a pair of source s with a pair of mirror s.

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ing only applies to inventory

(IC) transactions. Whenever an inventory transaction creates a general ledger (GL) entry for a specified combination of source s, the system automatically creates GL entries to the related mirror s:

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Debit Source 1 Credit Source 2 Credit Mirror 1 Debit Mirror 2 For example, when there is a work order issue, the system reflects the change on the balance sheet as well as on the income statement, creating two transactions: Debit WIP (Source 1) Credit Inventory (Source 2) Credit COP (Mirror 1) Debit Material Usage (Mirror 2)

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1 maps to Mirror 1. Source 2 maps to Mirror 2. If you are entering a standard journal entry manually in Standard Transaction Maintenance and are using mirror ing, enter the debit or credit to Source 1, then the reversing action to Mirror 1. Do the same for Source 2 and Mirror 2.

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Sub- and cost center codes can also be mirrored and reflected on the income sheet statement. Set All Sub-s and All Cost Centers to Yes to streamline the creation of source and mirror relationships. The values entered in the source sub- and cost center fields are re-used in the mirror sub- and cost center fields. When All Sub-s is Yes, leave the source and mirror sub- blank. Similarly when All Cost Centers is Yes, leave the source and mirror cost centers blank. The blank source field is treated as a wildcard. Mirror sub-s and cost center fields use the codes from the GL transaction. When All Sub-s or All Cost Centers is No, the system only creates mirror transactions when an exact match is found on the source , sub-, and cost center values in the mirror ing table.

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If GL s is Yes in Domain/ Control, each component you enter must be valid on its own and in combination with other number components. Sub- codes and cost center codes must be valid for all ranges of s and sub-s used in mirror ing. Set up ranges in Sub- Code Maintenance and Cost Center Code Maintenance.

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Entity: 1 Source 1: 1000 blank blank Source 2: 1500 blank 30 All Sub-s: Yes All Cost Centers: No Mirror 1: 2000 blank blank Mirror 2: 2500 blank blank

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Based on value of All Sub-s and All Cost Centers, all sub- fields must be blank. The blank sub-s in Source 1 and 2 are treated as a wildcard (any value matches). If the following inventory transaction occurs: Dr 1000 5000 Cr 1500 4000 30 The system creates the following mirror transaction: Dr 2500 4000 Cr 2000 5000

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For the following inventory transaction, no mirror transaction is created:

Dr 1000 5000 10 Cr 1500 4000 20

Although the system found a record in the mirror table that matched the (exactly) and sub- (using the wildcard), an exact match for the cost center was not found.