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.

RELATED TERMS
  1. Correspondent Bank

    A financial institution that provides services on behalf of another, ...
  2. Bank Deposits

    Money placed into a banking institution for safekeeping. Bank ...
  3. Vostro Account

    The account that a correspondent bank, usually located in the ...
  4. Brokered Deposit

    A large-denomination bank deposit that is sold by a bank to a ...
  5. Deposit In Transit

    A deposit in transit is money that has been received by a company ...
  6. Deposit Slip

    A small written form that is sometimes used to deposit funds ...
Related Articles
  1. Investing

    What is a Bank?

    A bank is a financial institution licensed to receive deposits or issue new securities to the public.
  2. Personal Finance

    Where To Put Your Cash: Call Deposit Vs Time Deposit Accounts

    Time deposit accounts and call deposit accounts allow customers to earn higher interest in exchange for less access to their cash.
  3. Investing

    What's a Correspondent Bank?

    A correspondent bank is a bank that acts on behalf of another bank, usually a foreign bank.
  4. Personal Finance

    What Is The Difference Between A Nostro And A Vostro Account?

    Nostro and vostro are Italian terms that describe the same bank account. They’re used when one bank has another bank’s money on deposit.
  5. Investing

    What is a Demand Deposit?

    A demand deposit is any type of account where the money in the account may be withdrawn at any time without prior notice to the financial institution.
  6. Financial Advisor

    Why Banks Don't Need Your Money to Make Loans

    Contrary to the story told in most economics textbooks, banks don't need your money to make loans, but they do want it to make those loans more profitable.
  7. Personal Finance

    Explaining the Reserve Ratio

    Reserve ratio is the amount of cash a bank must keep in its bank vaults or deposit into a central, governing bank.
  8. Investing

    Explaining Term Deposits

    A term deposit (more often called a certificate of deposit or CD) is a deposit account that is made for a specific period of time.
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. For what types of accounts are demand deposits available?

    Learn about the different types of accounts designated as demand deposit accounts, such as savings accounts and money market ... Read Answer >>
  3. What are the Federal Reserve's guidelines on demand deposit accounts?

    Read about some of the Federal Reserve's requirements and guidelines regarding the treatment, safeguarding and processing ... Read Answer >>
  4. How does the deposit multiplier affect a bank's profitability?

    Find out how a deposit multiplier affects bank profitability, how it increases the supply of money in the economy and why ... Read Answer >>
  5. 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 >>
Trading Center