HSBC's customised trade finance for S'pore firms

HSBC's customised trade finance for S'pore firms
Bank may soon offer option for S'pore-India trade

By MALMINDERJIT SINGH

(SINGAPORE) Singapore companies looking to do business in India may soon look towards customised trade financing options available there, according to Puneet Chaddha, Hongkong and Shanghai Banking Corporation (HSBC)'s managing director and head of commercial banking, India.

Speaking to The Business Times, he explained that while HSBC's standard products are good to a point, custom-made options are necessary and thus the bank is putting together the proposition of developing country-specific financing products.

Quoting examples of the India-Bangladesh and the India-UAE customised trade financing packages currently available in India, Mr Chaddha added that we are likely to see the same appearing for India-Singapore trade.
Such a development is likely to improve documentation and processes standardisation between banks in Singapore and India. Mr Chaddha said this would allow Singapore companies doing business in India to gain better access to financing than before and they would save through lower financial costs and turnaround time.
The global economic recession has altered the trend of financing choices for businesses in India. According to Mr Chaddha, the involvement of banks was kept low in the pre-crisis environment as buyers and sellers trusted each other more with credit options. However, as commercial trust becomes more fragile with the onslaught of the recession, more companies have turned to banks and their instruments, such as letters of credit, as credit enhancers.

Currently, Mr Chaddha explained, both small and medium-sized enterprises (SMEs) and large multinational corporations (MNCs) can draw from a host of financing structures and trade products that the banks in India provide. He pointed out that MNCs may also raise financing domestically or off-shore, depending on which is the cheaper market to borrow from.

Singapore is India's 14th largest import market and fourth largest export destination, as well as being the second largest provider of foreign direct investment into India. While Singapore's exports to India have largely been concentrated in mineral oils, electrical and medical equipment and organic chemicals, recent announcements by the Indian government to liberalise certain sectors of the economy, particularly financial services, higher education and defence, could signal more opportunities for businesses in Singapore.
'I see a greater sense of comfort among Singapore companies in doing business in India now,' Mr Chaddha said. 'As a result of the recent announcements by the Indian Finance Minister (on offering more banking licences), we will see more Singapore companies setting up operations in India, and particularly in the financial services industry,' he added.

HSBC, according to Mr Chaddha, will be following this segment of leading international business very closely as it looks to focus on facilitating cross-border trade. As such, he said the bank is clear that it will look towards penetrating the market that the India-Singapore trade flows creates.

At the same time, he explains that HSBC will create a proposition that it would like to bring to its customers in this segment, so as to highlight the benefits they may enjoy in doing business with the bank. This, he says, represents a more scientific approach to bilateral trade that HSBC is looking to adopt as opposed to simply targeting a certain percentage share of the market and he is confident that this will be a successful strategy.

Mr Chaddha was in Singapore to speak at a session of the International Enterprise Singapore's advisory seminar series on 'Doing Business in India' yesterday.