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Banking & Financial Interventions to Boost
Manufacturing in India
Khushnama Davar (MD & Head Transaction Banking Sales)
Rajat Bahree (Director, Transaction Banking Sales)
February 2015
1. Innovative Solutions around bridging Working Capital Gaps– Banks perspective and
plans
2. Use of Information Technology to speed up and streamline delivery of
Working Capital Solutions
3. Facilitating International Trade
Key Themes Covered
Looking Forward: Our Clients’ most Common Priorities
Order to cash
Treasury management
Liquidity management
FX management
Investments
Funding
Risk management
Trade finance
Forecasting
Account management
Procurement to pay
Purchase order
Receive invoice
Accounts payable
Payment Reconcile
Offer Order Invoice Collect Reconcile
•Incomplete reference
information
•Unmatched items
requiring manual
reconciliation
•Diverse collection points and instruments
•Finality of settlement •Convenience and ease
of placing and
redeeming deposits
•Access to broad range
of investment options
•Balancing safety,
liquidity and yield
•Sub optimal use of
liquidity due to trapped
or idle cash
•Inadequate central
controls
•Cumbersome interco-
loan tracking
•Account receivables
and account payables
timing do not match
•Increased need for
working capital
•Incomplete and non-
timely visibility of
cash positions from
various subsidiaries
•Manual, error prone
process for
consolidating cash
flow from
subsidiaries
•Inaccurate sales
forecast and AR/ AP
positions
• Multiple bank
accounts, multiple
statement sources and
formats
•Cumbersome account
opening change
process
• Finality of settlement
•Tracking and enquiring payment status
• Managing multiple payment instruments, cut-off times
and settlement dates
•Inability to fully centralise all payments (e.g. tax
payments)
Seamless access and Information
Linking your Objectives to your Working Capital Needs
Sales
Stock Holding
Funding requirements (as liquidity tied up in
receivables) to expand sales
while managing buyer risk (Credit and
Country risk)
Competitive source of finance for buyers/
distributors to Support Sales growth
Production
Order
Payment to suppliers / vendors
in India & Abroad
Financial support for
manufacturing operations
Cash /
Capital
Receivables
Finished
Goods
Raw
Material
Work in
Progress
Avail innovative solutions like
Vendor Prepay and Bank Payment
Obligation.
Rationalise Multiple accounts in
multiple locations (across clearing
zones in India)
Optimize returns on
trapped cash & increase control
and visibility
Free up liquidity tied up
in inventory
4
Automated Financing for Suppliers (Vendor Prepay)
Objectives
Automated reconciliation of
payables
Cheaper source of finance
to suppliers
Reduction in DPO
View your payment instructions
4. Debit account & Update ERP on payment
effected
View receivables
5. Liquidate asset OR payment to
supplier for non discounted invoices
1. Post dated Payment file
3. Pre payment of the all/ selected
accepted invoices with advice
2. Request for finance
You Supplier
(s)
Financing your suppliers based on our relationship with you..
(SCB purchases the
receivable from supplier)
Benefits to you
Based on our relationship, your suppliers will have access to alternative source of working
capital. You may be able to extend your DPO
Reconciliation of payables and automated processes ensure that you know when payments to
your suppliers need to be made.
Providing cheaper source of finance to suppliers and improving their liquidity helps create
more sticky and long term relationship with suppliers.
Why SCB
Best Supply Chain Finance
Provider in Asia – Global
Finance
5
Procuring through Bank Payment Obligations
Compared to Letters of Credit
• Electronic presentation of data instead
of physical documents - Improve
quality and objectivity of compliance
verification
• Quicker process as it focuses only on
data relevant for financing
• Can be added at any time, for any
amount value
• Sellers gain certainty of the timing of
cash flow and can improve liquidity
forecasts
• Sellers may use BPO to get pre-/post-
shipment finance through their own
bank
• Sellers can offer commercial incentives
Benefits to you
Operational Efficiency - Faster access to documents to take delivery of goods as documents bypass the banking
channel. Quicker resolution of deviations (Amendments) as both buyer and seller interact on an online portal,
Straight2Bank. Faster clarification on discrepancies. Documents of title can be received directly. Faster turnaround time
through initiation of import transactions electronically and timely execution and coverage of data reconciliation
Risk management - Quicker assurance for buyers in terms of security of supply with increased visibility
Cost Savings - With the ability to add payment commitment later in the transaction lifecycle, cost savings can be
achieved as the BPO issuance costs applies only to the tenor the BPO is issued for. Lowered banking costs due to the
removal of hidden costs associated with traditional documentary trade. More efficient use of the banking credit lines as
a result of Increased flexibility.
6
LC
Issuing
Bank
LC
Advising
Bank
Buyer Seller
Contract
Do
cu
me
nts
Ap
plic
atio
n
Documents
Issuance
Do
cu
me
nts
Ad
vic
e
Letter of
Credit
BPO
Obligor
Bank
BPO
Recipient
Bank
Buyer Seller
Contract
Documents
Data
Data
Data
Bank Payment
Obligation
Payment Payment
vs Letter of Credit Bank Payment Obligations
Rationalize Account Structure, Optimize Trapped Cash &
allow visibility and control
Cross Border Interest Optimization*
Objectives:
Rationalise Multiple accounts in
multiple locations (across
clearing zones in India)
Optimize internally generated
cash
Increase overall control and
visibility
Benefits to you
Rationalise the number of Accounts held across cities within India from a single bank
Maximize the interest earned on net credit balance by domestic sweeping (3rd party bank
sweeping not permitted by regulation in India)
Notional Aggregation or Cross Border Sweeping for overall Control & Visibility and monitoring
purposes. (Interest optimization not allowed due to regulation in India)
UK
UAE
USD
R
UK C/A
USD
R
USD
R
GBP
R
UK C/A
GBP
R
GBP
R
USD
R
UAE C/A
USD
R
USD
R
AED
R
UAE C/A
AED
R
AED
R
Local Sweep
Sweep via Multi party entrustment loan
(Cross- City specific approvals might be required)
A/cs participating in notional aggregation (Interest optimisation not allowed)
Interest optimization
7
Why SCB
One of the largest foreign
banks in India with
branches across multiple
cities.
Best bank for Liquidity
Management in Asia,
Africa & Middle East
(Global Finance award)
Managing Payment efficiency through Multiple Purpose Driven
Choices
Client
Prints
out
Cheques
Multi – Print sites
Client
Onsite
Cheque
Printing-
Client PC
Beneficiary
Supplier’s bank
Reports
& Alerts
File / Data
Transfer
Domestic
Electronic
Payments
ACH /Pay &
RTGS
Treasury Transformation
Cheque
File
Client Sends Payment
Instruction (pay type) to
Straight2bank
Host to Host
Infrastructure
connection to Client
Cheque Print Sites
Direct settlement to Beneficiary bank
- - -NEFT network (SCB is a direct
Clearing member)
Correspondent
bank
Route through
SWIFT network
Overseas
Supplier’s bank
Beneficiary
Objectives
Centrally Manage Multi-
location Supplier Payments
Automate the payment
processes & administration
and save on costs
Why SCB
SCB provides electronic access to a
fully automated ACH and RTGS
payment capability to more than
60,000+ branches / 90+ banks
Ability to offer innovative solutions
like Onsite Check Printing, 24 hour
book transfers, NACH, corporate
cheques on SBI stationary and IMPS.
8
Benefits to you
Enjoy float as account debited only upon cheque presentment
Centrally manage Multi-Location Supplier payments for faster turnaround time- Our
Straight2bank provides this automated capability.
Electronic Payments support payment to India wide ACH /RTGS connected branches and
Cheques through our direct clearing membership in India
Automation of payments via Straight2bank
…and Preventing Cheque frauds with “Positive Pay”
Client
Beneficiary
Beneficiary
Objectives
Centrally Manage Multi-
location Supplier Payments
Automate the payment
processes & administration
and save on costs
Why SCB
SCB provides electronic
access to a fully automated
ACH and RTGS payment
capability to more than
50,000+ branches / 84+
banks
9
We offer you
A market leading cheque fraud prevention tool in Asia
A secure mechanism with verification on:
– Cheque number and date
– Debit and credit account numbers
– Beneficiary name and amount
Corporate submits cheque issuance
information to
Bank Provider
In the event of a mismatch, the
information will be presented to the
corporate for verification
Bank provider matches issuance
information to those presented to
the bank by the clearing house for
payment
Monetize Your Receivables for Open account Sales and manage buyer & country risks
Objectives
Funding requirements (as
liquidity tied up in
receivables) while ensuring
that we Mitigate Buyer
(Credit & Country risk)
Manage Collections risk
Benefits to you
Off-balance sheet funding solution and an option of a ‘With recourse’ or “without recourse”
solution, Additional benefit of credit protection.
Cash upfront and flexibility in funding
Ability to offer competitive deferred payment terms to Your Buyer, potentially allowing you to
increase Sales
Control over collections from a widespread number of Buyers
Robust monitoring process for buyer payments and reconciliation of account receivables
Why SCB
Strong partnerships with
Insurance and
correspondent factors
Best Supply Chain
Finance Provider –
Global Finance
10
X
Credit Insurance SBLC Internal Limits Import Factors
Providing Short Term Pre-Shipment Financing for Supporting Manufacturing Operations
Objectives
Financial support for
manufacturing operations
Lower cost on FCY loan
You Buyer
1
2
5
Dispatches Purchase Order (PO)
Copy of Purchase Order
4
Dispatches Invoice, B/L and other documents
Copy of
documents
to bank
3
4a
Conversion to
Post Shipment
Finance
Funding against PO 6 Payment
on due
date
Benefits to you
Lower cost on FCY loan booking as compared to local currency financing in India.
Available in INR as well as FCY
Helps to maintain a better cash flow for your business as financing is available against every
confirmed export order.
Eliminates currency risk between receivables and bank payables
Why SCB
Robust and liquid balance
sheet
Liquidity available in US $
11
Buyer & Country Risk Mitigation - LC Confirmations
Objectives
Coverage of Buyer Credit
Risk
Coverage of Country Risk
With trade finance limits on over 1700 banks in over 100 countries, Standard Chartered offers various flexible solutions to help mitigate issuing bank and country risk for the countries that you export to.
29
LC Confirmation Foot Print (countries and # of banks)
148
26
8
304
83
Benefits to you
Standard Chartered offers various flexible solutions to help mitigate issuing bank and country risk
for your Export transactions
92
118
113
11
37
Why SCB
Strong presence in more than 90+ countries with 1,600 branches
Trade finance limits on over 1700 banks in over 100 countries
12
12
Monetise Inventory to free up liquidity
Objectives
Financing that will free up
liquidity tied up in inventory
Take advantage of
favourable market
conditions to build
inventory to maximise
profitability
Benefits to you
Access to incremental financing on the back of the collateral with lesser reliance on balance
sheet
Able to build inventory when conditions are favorable
Flexibility in amount of financing as it is tied to the market value of the commodity
Why SCB
Deep local presence in
more than 90+ markets in
Asia, Africa and the Middle
East
Footprint in the key
commodity countries
13
Supporting your Sales Growth by funding your Distributors
Objectives
Competitive source of
finance for distributors/
buyers
Ability to grow sales
Benefits to you
Increasing your sales by financing your distributors/ buyers (providing liquidity to your
distributors/buyers)
Helps create more sticky and long term relationship with the buyers
Upfront conversion of receivables into Cash
Reduced cost of collection
Why SCB
One of the leading
International banks to
offer buyer finance in
India .
Best Supply Chain
Finance Provider in Asia
– Global Finance
Goods + Bill + Invoice
Accepted Bill +
Invoice
Repayment on
due date
Contacts
buyer in case
of default Funds
Accepted Bill + Invoice + Transport
Docs Buyer You
1 2
3
4
14
Improving your Collections efficiencies through Virtual Accounts
Benefits to you
Immediate and unique payer level identification
Achieve faster reconciliation, reduce Day Sales Outstanding (DSO)
Increase sales by releasing client credit lines quicker
Reduce manual processing through straight-through cash application
We offer you
Single Virtual Account (across
paper/electronic and local and
foreign currencies) standardises
the cash application process
across payment methods,
currencies and markets
Flexible Virtual Account
options facilitating seamless
implementation since your
Buyer ID is used as the Virtual
Account
Enhanced reporting including
buyer name or
invoice/reference number
Integrated bank statement
becomes a single source of
transaction information such as
payer reference 15
Part A identifies client’s account
Part B identifies the Payer
Ability to Automate Reconciliation using Artificial Intelligence
Benefits to you
Artificial Intelligence: learns from manual processing and incorporates the learning in subsequent runs
Automated reconciliation: ensures that receipts are automatically reconciled against outstanding invoices
Powerful pattern recognition tools: automate data extraction and enrichment to capture human provided
information
Advance exception management: triggers workflows, auto identifies, queues, tracks and monitors exceptions to
expedite exception resolution
Analytics Dashboard: provides slicing and dicing of data-dimensions with drill down on areas of focus.
We offer you
Self-identification of automation
opportunities
Powerful pattern recognition:
automate data extraction and
enrichment from unstructured
information
Learn from experience; AND
manual actions performed on
unmatched transactions
Give suggestions with indicative
confidence level, allow user to
accept or reject
16
Migrating Distributors to NACH debits
Benefits to you
Reduction in bank accounts since NACH allows pulling of funds without opening an additional
account
Migrating to electronic collections in its entirety.
Existing bank accounts of dealers can continue with the convenience a one-time mandates to
their existing bankers
Operational efficiency since no housing, monitoring or lodgement of physical cheques into the
system
Uniformity
• Central eco system for electronic payment
• Standard operating and business rules pan India
Accessibility
• Pan India access to all participants
• Process file based transactions
Security & convenience
• Web based Centralized solution with in-built security features and multi-level data validation facility.
• Web based Mandate Management module along with on-line Dispute Management module
17
Client
NACH File
Back Office systems
Debit Dealer / Distributor
ERP
File
validatio
n
NACH Clearing
System
Destinatio
n bank
Validation of mandates and
confirmation of successful
upload
File
distributio
n
Confirmation
of debit /
return
Debit /
Reject
Reverse file
for success /
return
1 2
3
4 5
6 7
8
9 10
Standard Chartered
Standard Chartered Bank - 160+ year history across emerging markets
We bank the people and companies driving investment, trade and the
creation of wealth across Asia, Africa and the Middle East.
Robust and liquid balance sheet, strongly capitalised and predominantly deposit funded franchise
Financial
Strength
Dynamic
Markets
Unrivalled presence in growth markets of Asia, Africa and the Middle East Present in Australia, Europe and the Americas to facilitate cross-border transactions.
Deep local
knowledge
International network with local knowledge Providing access to markets, assets and capital across our footprint A diverse group of people challenging the norm to generate value for you
132 Nationalities
Client
Spectrum
Customised, value-added solutions to meet your needs across the spectrum Here for good: We stay open for our clients, even in difficult times.
A+/A1/AA- S&P/Moody’s/Fitch Credit Ratings
11.8% Core tier 1 capital ratio
4% Trading assets to total assets
76% Advances to deposit ratio
Global Reach - Over 150,000 touch points across 90+ markets
Franchise country with partner banks
Franchise country without partners
Origination country with alliance banks
Origination country without alliance banks
Non presence country with alliance banks
Standard Chartered has a network of over 1,200 own branches and outlets in 40+ countries across Asia, Africa and
Middle East providing transaction banking services
Through our branches, outlets and partners we have over 150,000 touch points across 90+ markets across the globe
COUNTRY BREAKDOWN Botswana 18 18
China 104 66,156
Ghana 28 110
Hong Kong SAR 78 900
India 100 46,946
Indonesia 26 1185
Kenya 39 139
Malaysia 39 40
Nepal 15 15
Nigeria 44 1328
Pakistan 116 2,516
Singapore 18 c.750
South Korea 302 331
Taiwan 88 c.11,275
Thailand 26 c.11,140
Uganda 12 63
United Arab Emirates 11 c.110
Zambia 21 103
Zimbabwe 26 26
20+ Other Presence
Countries 138 10,524
40+ Non Presence
Countries 1,093
Total 90+ countries 1200+ 150,000+ Branches, implants, subsidiaries and offices of
SCB PLC
Total touch points including partners
Our aspirations
Relationships
► Build trusted relationships with the people, companies and institutions shaping our
markets’ future
Investment
► Play a leading role in facilitating investment and deepening financial markets in our
economies
Trade
► Become the undisputed leader in commercial payment and financing for and in Asia,
Africa and the Middle East
Wealth
► Be recognised as a leader in growing and protecting our clients’ wealth
Relevant scale
► Establish sufficient scale, balance sheet and franchise strength to be relevant and
influential in our key markets
Reported results
Profit before tax
$3,268m H1 2013: $4,088m /
H2 2013: $2,870m
Loans and advances to customers
$305bn H1 2013: $292bn /
H2 2013: $296bn
Customer deposits
$391bn H1 2013: $381bn / H2 2013: $391bn
Capital and liquidity metrics
Total capital ratio
17.3% (CRD IV)
H1 2013: 16.9% (Basel II) /
H2 2013: 17.0% (CRD IV)
Common Equity Tier 1 (CET1) ratio
10.5% (CRD IV)
H1 2013: 11.4% (Core Tier 1 ratio – Basel
II) /
H2 2013: 10.9% (CET1 ratio – CRD IV)
Advances-to-deposits ratio
78.1% H1 2013: 76.6% / H2 2013: 75.7%
CET1 ratio (end point basis)
10.7% (CRD IV)
Liquid asset ratio
30.5% H1 2013: 28.3% / H2 2013: 29.8%
Financial strength working for you
Financial highlights For the six months ended 30 June 2014
Strong credentials
Primary listings in London, Hong Kong and Mumbai
top 20 in FTSE 100 Index
We bank the people and companies driving
investment, trade and the creation of wealth
across Asia, Africa and the Middle East.
22 Credentials
Credit ratings
A+/A1/AA-
(S&P/Moody’s/Fitch)
Well-positioned for future growth
Our global market position and share (%) Confidence in the growth prospects of our
markets
2013-2019 forecast GDP and trade growth (CAGR%)
6.4% 8.6%
3.9% 7.7%
4.5%
10.8%
7.0% 3.9%
5.7% 6.2%
6.8% 6.5%
4.1% 5.2%
3.5%
8.2%
3.0% 6.4%
5.2% 5.2%
Source: 1 Market Research, International Monetary Fund; 2 Oliver Wyman, Standard Chartered
analysis: 3 Thomson Reuters; 4 CHIPS, as at 30 Sept 2014
#2 6%
#2 10%
#7 7%
2
3
4
1
“Here for good is about our commitment to our customers, our
markets and ourselves. It is us at our best.”
Peter Sands
Group Chief Executive
Our Capabilities: Transaction Banking
Transaction Banking
Cash Management • Payments (Domestic & Cross-border)
• Collections (including Mobile)
• Liquidity management
• Account services
Trade Finance • Letter of Credit Issuance
• Import and Export Financing
• Open Account Trade - Supply Chain Financing, Receivable services,
Structured Warehouse Financing
• Trade Guarantees
• Bank Payment Obligation (BPO)
• Bill Discounting on Buyer Risk (BDBR)
Securities Services • Custody and Clearing
• Fund Accounting Services
• Escrow Services
• Derivatives Clearing Services
• Securities Lending & Borrowing Services
• Qualified Foreign Investors (QFIs)
Electronic Channels • Web (Cash, Trade & Custody)
• H2H (Cash)
• ERP Integration (Cash & Trade)
• Expertise in SAP XI and Oracle e-business suite (Cash)
Local expertise + Global capability ► Full range of innovative solutions
Network: Own branch nearly double of nearest foreign bank, Largest Correspondent Bank
tie-ups in India
Trade Corridors: Ability to provide solutions across geographies. Helping clients manage cross-border supply chains
and banking relationships smoothly
Full capability on RMB including LC issuance, Advising and Remittances
Recent Awards
The Asset Triple A Awards
Best in Working Capital and Trade Finance (2013 -
2014)
Best Transaction Bank (2013)
Global Finance Awards
Best Global Integrated Trade, Supply Chain Finance and
Cash Management Solutions (2013 - 2014)
Best Supply Chain Finance Provider in Middle East
(2014)
Best Sub custodian Bank in India (2014)
Bank Sierra Leone, Gambia and Cote d’Ivoire (2014)
Best Consumer Internet Bank (Global, Africa) (2014)
The Banker Transaction Banking Awards
Best Global Transaction Bank (2014)
Best Transaction Bank for Cash Management (2014)
Best Transaction Bank from Europe (2014)
Financial World Innovation Awards
Winner: Innovation in Cash Management or Treasury
Services for Straight2Bank Liquidity
Euromoney Awards
Best Transaction Services House in Africa (2014)
Best Transaction Services House in the Middle
East(2014)
Best Structured Products House (2014)
Best Bank in Zambia (2014)
#1 African Currencies (2014)
Disclaimer
This material has been prepared by Standard Chartered Bank (SCB), a firm authorised by the United Kingdom’s Prudential Regulation Authority and regulated by the United
Kingdom’s Financial Conduct Authority and Prudential Regulation Authority. This material is not research material and does not represent the views of the SCB research
department. This material has been produced for reference and is not independent research or a research recommendation and should therefore not be relied upon as such. It
is not directed at Retail Clients in the European Economic Area as defined by Directive 2004/39/EC neither has it been prepared in accordance with legal requirements
designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.
It is for information and discussion purposes only and does not constitute an invitation, recommendation or offer to subscribe for or purchase any of the products or services
mentioned or to enter into any transaction. The information herein is not intended to be used as a general guide to investing and does not constitute investment advice or as a
source of any specific investment recommendations as it has not been prepared with regard to the specific investment objectives, financial situation or particular needs of any
particular person.
Information contained herein, which is subject to change at any time without notice, has been obtained from sources believed to be reliable. Some of the information
appearing herein may have been obtained from public sources and while SCB believes such information to be reliable, it has not been independently verified by SCB. Any
opinions or views of third parties expressed in this material are those of the third parties identified, and not of SCB or its affiliates. While all reasonable care has been taken in
preparing this material, SCB and its affiliates make no representation or warranty as to its accuracy or completeness, and no responsibility or liability is accepted for any
errors of fact, omission or for any opinion expressed herein. SCB or its affiliates may not have the necessary licenses to provide services or offer products in all countries or
such provision of services or offering of products may be subject to the regulatory requirements of each jurisdiction and you should check with your relationship manager or
usual contact. You are advised to exercise your own independent judgment (with the advice of your professional advisers as necessary) with respect to the risks and
consequences of any matter contained herein. SCB and its affiliates expressly disclaim any liability and responsibility for any damage or losses you may suffer from your use
of or reliance of the information contained herein.
This material is not independent of SCB’s or its affiliates’ own trading strategies or positions. Therefore, it is possible, and you should assume, that SCB and/or its affiliates
has a material interest in one or more of the financial instruments mentioned herein. If specific companies are mentioned in this communication, please note that SCB and/or
its affiliates may at times seek to do business with the companies covered in this material; hold a position in, or have economic exposure to, such companies; and/or invest in
the financial products issued by these companies. Further, SCB and/or its affiliates may be involved in activities such as dealing in, holding, acting as market makers or
performing financial or advisory services in relation to any of the products referred to in this communication. Accordingly, SCB and/or its affiliates may have a conflict of
interest that could affect the objectivity of this communication.
You may wish to refer to the incorporation details of Standard Chartered PLC, Standard Chartered Bank and their subsidiaries at
http://www.standardchartered.com/en/incorporation-details.html.
This material is not for distribution to any person to which, or any jurisdiction in which, its distribution would be prohibited.
© Copyright 2014 Standard Chartered Bank. All rights reserved. All copyrights subsisting and arising out of these materials belong to Standard Chartered Bank and may not
be reproduced, distributed, amended, modified, adapted, transmitted in any form, or translated in any way without the prior written consent of Standard Chartered Bank.
Appendices
In-House
Bank SSC / Payments
Factory
Full Service
Treasury Centre
Basic Treasury
Centre
Decentralised
Partnering in your Treasury Transformational Journey
ROB
Degree of Sophistication
Company Objective V
isib
ilit
y
Co
ntr
ol
Op
tim
sa
tio
n
Basic visibility over
positions
Coordinate
cash mgt,
funding, FX
Actively
manage debt,
FX, liquidity
Centralise
payments /
collections
Deliver
Banking
Services
Internally