Interbank Deposits

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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.

INVESTOPEDIA EXPLAINS '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
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  5. What role does a correspondent bank play in an international transaction?

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