HSBC and Reliance Industries have completed a landmark digital transaction in India, involving the electronic presentation of export documents under a Letter of Credit, that paves the way for faster and more cost-efficient cross-border trade.
Instead of exchanging documents under a Letter of Credit physically, as would be normal practice, the partners e-presented documents through a digital platform built by London-based Bolero. In doing so they were able to settle the trade in a single day, thus improving the cash-to-cash cycle. A paper-based documentary credit transaction typically takes up to 15 days to settle.
Aditya Gahlaut, Head of Global Trade and Receivables Finance for HSBC India, said:
“This first step we’ve taken with e-Presentation has big implications for companies in India and elsewhere. It shows that the participants in a cross-border trade - from producers to banks and shippers - are willing to collaborate to achieve an end-to-end digital transaction. It also shows that collaboration is worthwhile, optimising companies’ working capital so they can move on to their next deal sooner.”
Soumyo Dutta, Group Treasurer for Reliance Industries Limited, said:
“Reliance expects global trade to make a rapid shift to electronic platforms in the coming years. This transaction marks the first step in evolving the ecosystem where all the key players participate to drive efficiencies and lower costs.”
India’s government is driving a ‘Make in India’ agenda to encourage economic growth through exports. Whilst export growth is expected to outpace GDP growth of approximately 7.5%, cross-border trade is regulated by multiple government agencies and involves extensive procedural requirements, making it paper intensive. Technology has a critical role to play in transforming the paper-based trade finance business into a digitally-driven business; making the movement of documents faster, cutting costs and optimising working capital.
HSBC and Reliance have taken a lead in this strategic initiative, which is an industry first for India. Following this first e-Presentation transaction, HSBC India will now make e-Presentation available to other business clients.
Stuart P Milne, Group General Manager & CEO, HSBC India, said:
“As the world’s leading international trade bank, we have a responsibility to lead in the digital transformation of the trade finance landscape. This transaction is a significant move in that direction. We have built the required capability to support this industry-leading initiative and will continue to make investments in the digitisation of trade to support our customers and engage stakeholders in building a sustainable trade finance ecosystem.”