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Trade finance

Created by : Deepak Somani, Associate, HDFC Bank  | 11 29 2008 04:23:49 +0000
Industry : BankingFunctional Area : Capital Management(Corporate Finance)
Activity:  4444 views;  last activity : 09 15 2010 08:08:57 +0000
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Top Argument

Numbers are always self explanatory. Trade finance opportunities in India could offer revenues in excess of over $2 billion in the next five years, against the current $1.2 billion. I believe that banks can also increase their profitability by offering not just traditional products like letters of credit (LCs) and bank guarantees (BGs), but also additional services like forex and derivatives. Forex income could account as much as 60 per cent of total LC income.

By Deepak Somani, Associate, HDFC Bank  11 29 2008 04:23:49 +0000
Top Argument

The situation isn’t very promising. There are some challenges that has to be dealt with. Client retention is a challenge. While LCs are still growing, it is a slower pace than open account. Partnerships are the way this business will increase but its hard to find reliable partners. Its important that banks should adopt risk mitigation tools for trade finance such as loan syndication and offering credit default swaps. About insurance, I say that trade credit insurance is still in a nascent stage in India and banks should think on these lines.


By Rakesh Chakraborty, Sr. Associate, ING  11 29 2008 04:24:41 +0000

Kindly find my analysis for The Future of Trade Finance by clicking the below link.

By Amit , Sr Manager, ABN Amro  | 09 15 2010 08:08:55 +0000

This is what the present trend is. There is lot of movement away from the traditional stand-alone SME trade finance to the supply chain kind of business, especially in the auto sector. Trade finance is gaining momentum in global economy and banks are rethinking the way it is being done. The future of trade finance depends on collaboration between buyers, sellers, logistic companies, insurance companies and financial institutions.

By Akhilesh Nimje, Associate, Kotak Mahindra  | 11 29 2008 04:24:28 +0000
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