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Collateralised Trade Finance

Collateralised Trade Finance. Structured Trade Finance. Trade finance is the fuel that powers the engine of world trade, which is helping to pull the world economy out of recession

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Collateralised Trade Finance

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  1. Collateralised Trade Finance

  2. Structured Trade Finance • Trade finance is the fuel that powers the engine of world trade, which is helping to pull the world economy out of recession • Structured Trade Finance (STF) is an alternative mean of providing trade financing facility so as to overcome the difficulty of obtaining conventional payment guarantees in the form of government or (Central/Commercial) bank guarantees making it an effective financing solution in the developing markets. • the short-term and self-liquidating nature of trade finance, which is often collateralized by the underlying shipment of goods, makes it one of the safest forms of lending

  3. Collateralised Trade Finance Collateralised Trade Finance (CTF) provides tailor-made structures to meet business' trade financing needs outside of normal banking credit lines, bespoke solutions to suit specific trade financing needs

  4. Collateralised Trade finance > Primary risk on underlying Commodity. > Storage /Control of Commodity with Third Party Collateral Management > Borrower Profile /Financials Secondary Comfort > Lender’s risk to related to the Company’s ability to perform.

  5. Why CTF? • Growing and profitable business experiencing cash flow constraints • To manage procurement, inventory and sales risks better • When companies turning down big contracts due to credit limits on your existing banking facilities • When require bespoke and improved risk-mitigated specialised trade financing • Mitigate the Cross border and Country risks.

  6. Benefits of CTF • Off balance sheet trade finance facilities through structured self-liquidating deals, meaning that you will be able to undertake much bigger trade-related transactions than what normal banking facilities would usually allow. • The facilities can be approved on a deal-by-deal basis or a blanket facility that is reviewed annually for recurring transactions. • It provides debt monitoring and collection services. • It creates balance sheet capacity and improves your business' cash flow. • It enhances the credit rating of the credit facility beyond your business' credit rating. • It produces a robust, bespoke financing structure to suit your business' unique trade financing needs.

  7. Global Trade Financing Programme The $5 billion Global Trade Finance Program (GTFP) extends and complements the capacity of banks to deliver trade financing by providing risk mitigation in new or challenging markets where trade lines may be constrained. The guarantees are available for all private sector trade transactions that meet International finance corporation(IFC) eligibility criteria

  8. Trade finance scenario in Emerging Markets

  9. Challenges • The Products involves Borrower, Lender and Collateral Manager. • Bankers needs to understand the total value chain of the transaction before lending. • Financial Soundness of Collateral Manager • Integrated Solutions • Quality Storage Capacity • Comprehensive Insurance Cover • Uniform laws covering multiple acts / licensing requirements • Vibrant Futures Market

  10. Role of Collateral Manager “Collateral Management enables the lenders to set up operational risk parameters while lending and also to control and monitor these parameters” • Essential component of effective credit risk management • One of the method of securing the loan with physical commodity

  11. Company Overview: Institutional Shareholding

  12. Leveraging on Network, Presence & Contact Depth of Coverage • Dedicated presence throughout all major markets in India Breadth of Coverage • Ability to provide Collateral Control, Warehousing, Testing & Certification and SCM Services Local Knowledge • Local knowledge of top and middle tier traders , larger corporate and processors Excellent Contacts • Including all major trading companies, banking institutions and NBFC

  13. Presence (31 March- 2014) • 952 Locations • 18 States + 2 UT • 57 Commodities • Client Base Serviced + 30000 • AUM – Rs 180 Billion • Cross Border Trade transactions 6 37 3 24 18 39 1 3 1 9 50 26 4 1 29 52 117 50 42

  14. NCML : Business Segments • Storage & Preservation • Collateral Management • Supply Chain Management • Testing & Certification • Crop & Weather Intelligence

  15. Thank you.

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