Interbank Deposits

DEFINITION of 'Interbank Deposits'

Any deposit that is held by one bank for another bank. In most cases, the bank for which the deposit is being held is referred to as the correspondent bank. The interbank deposit arrangement requires that both banks hold a "due to account" for the other.

BREAKING DOWN 'Interbank Deposits'

Special terms apply when the correspondent bank is a foreign bank. In this case, the due to account is a "nostro" account for the bank holding the deposit. It is referred to as a "vostro" account for the foreign correspondent bank.

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RELATED FAQS
  1. What is the difference between a demand deposit and a term deposit?

    Understand the meaning of demand deposits and term deposits, and learn about the major differences between these two types ... Read Answer >>
  2. What role does a correspondent bank play in an international transaction?

    Understand what a correspondent bank is and how it operates to facilitate currency exchange and financial transactions between ... Read Answer >>
  3. What is the difference between a Nostro and a Vostro account?

    Understand the terms nostro account and vostro account, and learn how they are used for accounting purposes in international ... Read Answer >>
  4. What is the difference between a Nostro account and a regular bank account?

    Read about the differences between a nostro bank account, vostro bank account and the standard commonly used demand deposit ... Read Answer >>
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    Find out how a deposit multiplier affects bank profitability, how it increases the supply of money in the economy and why ... Read Answer >>
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