GTR recently held its annual GTR Summit in Mumbai. Excerpts from the panel discussions:
Panelists:
Jeetesh Bhatia, Senior Director & Head, Global Transaction Banking Department India, Mizuho Bank
Sunil Jain, Senior Vice-President & Head, Trade Product, HDFC Bank
Bharavi Cheerla, Director, India Head – Trade & Supply Chain Finance, Bank of America
Megha Kaushik, General Manager, Supply Chain Finance, Patanjali Foods
Naveen Kumar, General Manager, Trade & Structured Finance, Olam Agri India
Sanjay Desai, Vice-President & General Manager, Asia, Supply Technologies (Moderator)
Jeetesh: SCF is financing the seller based on some credentials of the buyer. There are 2 broad categories – factoring and non-factoring. The benefit of SCF is early financing and better rates. Corporate Payment Undertaking is the agglomeration of various non-factoring solutions. There is growing partnerships between banks and fintechs. ESG certifications and re-validations are also growing.
Sunil: Post covid, SCF has seen a lot of transaction. The 4 pillars of SCF are: (i) Product (ii) Insurance for banks, thought traction is slow but rising (iii) Trade Exchanges started slowly but rising and now $1.350 trillion. (iv) Insurance on trade exchange, and these exchanges can do secondary sell-down to expand reach and spread the risk. Banks are the main players but NBFCs are catching up. E-invoicing and e-way bill has improved authenticity dramatically. Fintechs have the agility because of their technology. Digital reach of platforms expands the physical reach of banks. Documentations used by banks slows down the process. In India, banks and fintechs are now cooperating with each other rather than competing.
Naveen: Trade Credit Insurance is still sitting on the sidelines. Anchor can put his own balance sheet to give comfort to bankers. Anchor can get the NIM benefit which was going to banks. Another opportunity is asset tokenization of invoice and convey to deep tier. Tokenization can break invoice into multiple parts. Tokenization can monetize asses sitting on the balance sheet. There is no equivalent of JAM (Jandhan Aadhar Mobile) for domestic trade and cross-border trade. We need an international trade stack of buyers, sellers, lenders, insurers, shippers, etc. Need customers from multiple countries. There are major tech platforms like IBM Hyperfabric and R3. Banks understand documents, but they need experts who understand commodities.
Megha: Govt of India is running on 3 I’s : Innovation, Infrastructure and Investment. Semi-urban and rural need to be covered. We have financial products for individuals, but there is a knowledge gap. They know QR code but not the benefit of cashflow finance. They are still thinking in terms of secure financing. The second important aspect is cybersecurity.
Bharavi: Fintechs are developing solutions around tokenization. Geo-political ecosystem has evolved rapidly and regional FTAs are gaining prominence. India has signed 13 FTAs, mostly in East and SE Asia. However, while exports have grown by 30%, imports have rocketed by 80%. For FTAs, it is much more consultative approach with industry to ensure their benefits. Government is tying in FTA to exporters. Govt is looking for lesser dependence on China and deepening trade with Africa. Bankers should be aware of impact and opportunities of FTAs.
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Panel Discussion: Optimizing cashflow for working capital needs
