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Introduction to Trade Finanace

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What is Trade Finance
Importance of Trade Finance
Basics of Trade Finance

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Introduction to Trade Finanace

  1. 1. S V SUBRAHMANYAM M Sc., CAIIB,CMA, ACS
  2. 2. TRADE FINANCE –An IntroductionAGENDA  INTERNATIONAL TRADE & INHERENT RISKS  DEFINITION  PLAYERS & STAKE HOLDERS  ELEMENTS OF TRADE FINANCE  TF AGENCIES  NEED FOR TF  COURSE CONTENTS  SUMMARY
  3. 3. TF – A Science or a set of activities??
  4. 4. TRADE FINANCE – An Introduction TRADE DOMESTIC INTERNATIONAL The nature of relationship between the importer and exporter is critical to understanding the methods of import-export financing utilized in industry.
  5. 5. INTERNATIONAL TRADE • ROLE OF TF IN INTERNATIONAL TRADE • RISKS IN INTERNATIONAL TRADE – POLITICAL – LEGAL – COMMERCIAL International trade is, in principle, not different from domestic trade as the motivation and the behavior of parties involved in a trade do not change fundamentally regardless of whether trade is across a border or not.
  6. 6. TRADE FINANCE - DEFINITION • Basically related to 'Domestic as well as International Trade Transaction'. • Could be related to supply of goods or services or know-how. • Evolution of Trade Finance • How TF works
  7. 7. TRADE FINANCE – Players & Stakeholders Importers & Exporters Bankers & Financiers Insurers & Export Credit Agencies Other Service Providers
  8. 8. TRADE FINANCE - Elements • TRADITIONAL – LC – BG – BILLS – BONDS – BANK TO BANK REIMBURSEMENTS
  9. 9. TRADE FINANCE - Agencies • Export credit agencies • Insurance agencies • Bilateral & Multi lateral agencies
  10. 10. TRADE FINANCE - Need • Strengthen supplier relationships • secure supplies of key materials • standardizing or extend payment terms • Address funding and risk mitigation needs – via tailored on and off balance sheet financing solutions in the open-account trade environment • Improve working capital efficiency – through accelerated cash flows generated by receiving early payments on a true-sale basis • Strategically manage increasing sales volumes and internal credit limits against key buyers • Gain visibility into transactions with real-time or scheduled reporting utilizing our proprietary platform
  11. 11. COURSE CONTENTS- Certification program in Trade finance • Introduction to Trade Finance • Documentary Credits • Letters of Credit • Exchange Rate Maintenance • Forward Contracts • Foreign Bills Remittances • Pre and post shipment credit • Bank Guarantees For more details visit www.bfsiacademy.com
  12. 12. SUMMARY KEY BUSINESS PRINCIPLES DEFINTION OF TRADE FINANCE TRADE FINANCE AND INTERNATIONAL TRADE TF AND FINANCIAL SECTOR

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