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Introduction to Trade Finance

This document provides an introduction to trade finance. It defines trade finance as activities related to domestic and international trade transactions, including the supply of goods, services, or knowledge. It outlines the key players in trade finance as importers, exporters, bankers, financiers, insurers, and export credit agencies. The document also lists some traditional elements of trade finance like letters of credit, bank guarantees, bills, and bonds. It describes the need for trade finance in strengthening supplier relationships and addressing funding and risk mitigation needs in international trade.

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Sudershan Thaiba
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403 views13 pages

Introduction to Trade Finance

This document provides an introduction to trade finance. It defines trade finance as activities related to domestic and international trade transactions, including the supply of goods, services, or knowledge. It outlines the key players in trade finance as importers, exporters, bankers, financiers, insurers, and export credit agencies. The document also lists some traditional elements of trade finance like letters of credit, bank guarantees, bills, and bonds. It describes the need for trade finance in strengthening supplier relationships and addressing funding and risk mitigation needs in international trade.

Uploaded by

Sudershan Thaiba
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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S V SUBRAHMANYAM

M Sc., CAIIB,CMA, ACS


TRADE
AGENDA
FINANCE –An Introduction
 INTERNATIONAL TRADE & INHERENT RISKS
 DEFINITION
 PLAYERS & STAKE HOLDERS
 ELEMENTS OF TRADE FINANCE
 TF AGENCIES
 NEED FOR TF
 COURSE CONTENTS
 SUMMARY
TF – A Science or a set of
activities??
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.
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.
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
TRADE FINANCE – Players &
Stakeholders
Importers & Exporters
Bankers & Financiers
Insurers & Export Credit Agencies
Other Service Providers
TRADE FINANCE - Elements
• TRADITIONAL
– LC
– BG
– BILLS
– BONDS
– BANK TO BANK REIMBURSEMENTS
TRADE FINANCE - Agencies
• Export credit agencies
• Insurance agencies
• Bilateral & Multi lateral agencies
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
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
SUMMARY
KEY BUSINESS PRINCIPLES
DEFINTION OF TRADE FINANCE
TRADE FINANCE AND INTERNATIONAL TRADE
TF AND FINANCIAL SECTOR

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