Event Discusses Solutions to Boost Trade Credit

World Trade Centre (WTC) Mumbai organised an interactive panel discussion on ‘Trade Credit: Its Relevance to Global Value Chains in Context to Indian MSMEs’ at WTC Mumbai on April 29, 2016 which was sponsored by Deutsche Bank.

Mr. Vijay Kalantri initiated the discussion saying, “Government and the Reserve Bank of India (RBI) must work with a vision to address credit needs of Micro Small and Medium Enterprises (MSMEs). The most worrisome fact is that the share of bank credit to MSMEs has declined from around 12% some years ago to 8% in recent years. The key policy priority is to simplify norms and procedures for sanctioning loans to MSMEs and have faith in their repayment capacity. MSMEs need timely access to credit at reasonable cost.”

A Knowledge Paper on ‘Trade Credit: Its Relevance to Global Value Chains in Context to Indian MSMEs’ prepared by WTC Mumbai was released on this occasion.

Mr. Ritesh Singh, Group Economist, Raymond Ltd., while moderating the session, emphasized on innovative and tailor-made banking products in trade credit that would serve international markets in Africa.

Mr. Arun Sehgal, Chairman, Chempro Pharma Pvt Ltd, said “India is lagging far behind European countries on adoption of digital technology by banks and financial institutions for processing trade credit and extending innovative factoring services. India needs to integrate with international standards to upgrade its trade credit products. In order to promote factoring services for import and export, factoring service providers in India must accept third party quality certification, as in Europe.”

Dr. Sunjay Koyande, Director, CCRT Laboratories stressed on issues confronting the sector in accessing trade credit. The existing documentation procedure for accessing trade credit creates hassles and stress on MSMEs.

In order to ensure access to institutional credit, Mr. Anurag Mishra, Regional Lead–Asia Pacific Financial Institutions Group, Global Trade Finance & Supply Chain Solutions, International Finance Corporation suggested that MSMEs must improve their book keeping practices and adopt sound financial disclosure norms.

Mr. Saurabh Jain, Vice President, Head Business Banking Products, Private Wealth & Commercial Clients–India, Deutsche Bank said that the balance sheet of MSMEs do not reflect their business value as considerable number of transaction are conducted in cash. Therefore, while business value of MSMEs has increased, it is not reflected in the balance sheet, thereby restricting their ability to access bank credit.
Mr. Lokesh Kumar, Deputy General Manager, EXIM Bank stated that his Bank is supporting exporters through buyer’s credit facility, which is non-recourse funding and completely eliminates payment risks to exporters. EXIM Bank also offers credit support to MSME exporters under its Global Trade Finance Programme.

Mr. Samarth Mathur, Product Manager, Trade Finance, Kotak Mahindra Bank explained the constraints faced by banks in extending credit to MSMEs.

In photo: From (L-R) Mr. Anurag Mishra, Mr. Vijay Kalantri and Mr. Saurabh Jain releasing the knowledge paper.