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At present metal oxide arresters find limited applications against very fast transient overvoltages (VFTOs). To enable these arresters to function effectively against VFTOs, it becomes necessary to study its design aspects and improve it. With this in view, modelling of arrester under VFTO has been performed. Experimental studies have been conducted to determine the behaviour of one 12 kV arrester assembly under VFTO. It is observed that there is a delay in the initial response of the arrester, which increases with steepness of the current surge because of stray capacitance effect. Based on this study, an innovative arrester model (198 kV) with distributed parameters for VFTO is proposed by incorporating the block and stray capacitance values, which are calculated using finite element method (FEM). The dynamic performance of arrester is successfully obtained using electromagnetic transient program (EMTP) for current surges of different front times. A dynamic hysteresis curve is constructed using proposed arrester model to verify the relative delays between the residual voltage and current surge. A few modifications in the arrester have been suggested to improve the dynamic performance and also for the new testing procedure of arrester under VFTO.