International Conference on G20 Trade Finance Cooperation during the 1st Trade and Investment Working Group (TIWG) Meeting, Scheduled in Mumbai on March 28th, 2023
March 28: The 1st TIWG meeting under India’s G20 Presidency is scheduled in Mumbai, from March 28 − 30. During this three-day Meeting, over 100 delegates from G20 member countries, invitee countries, regional groupings and international organizations will engage in deliberations to accelerate global trade and investments.
On the first day, on March 28, a seminar on ‘Trade Finance’ will be held. The anchoring agencies for this seminar are India EXIM Bank and Export Credit Guarantee Corporation of India (ECGC).
Trade finance supports economic growth, and it is integral for maintaining international trade flows, for mitigating risks emerging from tight liquidity. Around 80% of all international trade uses some type of trade finance instrument, such as letter of credit, supply chain financing, invoice discounting and receivables financing. Global trade finance involves a number of parties, including banks, trade finance companies, export credit agencies, insurers, importers and exporters. Trade finance is the lifeblood of cross-border trade. It is estimated that in 2020, $9 trillion of trade finance transactions were supported by major global banks. Yet, trade finance gap is widening. As estimated by the Asian Development Bank (ADB), the gap which was $1.5 trillion in 2018 has now increased to $ 2 trillion. It is thus imperative to deliberate on action-oriented solutions that can reduce finance gap and make it accessible harnessing the potential of digital tools and technology. Micro, Small and Medium Enterprises (MSMEs) which sustain livelihoods and contribute to global economic growth in both the developing and developed countries, are disproportionately affected by the yawning trade finance gap.
In this backdrop, this seminar will hold two sessions. The first session will highlight the role of banks, financial institutions, development finance institutions and export credit agencies in closing the trade finance gap, and the second session will delve into how digitalization and fintech solutions can improve access to trade finance.
Session 1: The role of banks, financial institutions, development finance institutions and export credit agencies in closing the trade finance gap
Moderator: Ms. Latha Venkatesh, Executive Editor, CNBC TV 18
Panel members: Mr. Steven Beck, Head of Trade Finance, ADB; Prof. Andreas Klasen, Professor of International Business and Director, IFTI, Offenburg University, Germany; Mr. Gaurav Bhatnagar, Managing Director, Standard Chartered Bank
The first session will take a macro view of the current trends in international trade and trade finance, and their future prospects. Some key pointers of the discussion are listed below:
1. Current trends in international trade and trade finance amidst the pandemic and growing import bills in developing countries.
2. Cause of trade finance gaps, including reduced credit line support in the private sector and inflation cuts into bank lending limits.
3. The role of export credit agencies in bolstering trade finance
Session 2: Accelerating digitalisation and fintech solutions can improve access to trade finance
Moderator: Ms. Tamanna Inamdar, TIMES Group
Panel members: Mr. John Drummond, Head of the Trade in Services Division of OECD; Mr. Fareed Alasaly, Deputy Governor of International Organizations and Agreements, Saudi Arabia; Mr. Ketan Gaikwad, MD & CEO, Receivables Exchange of India Limited
During this session, trends in digitalisation of trade finance will be discussed in detail, and how these can accelerate innovation and efficiency to make trade finance accessible for firms, especially MSMEs. The discussion will also look at current and emerging fintech solutions that can assist in making customized lending decisions as well as enhance trade finance supply for MSMEs. Some of the specific discussions would include:
1. Need for digitalising trade finance by working with multiple stakeholders to innovate advanced technologies for revamping the trade ecosystem in entirety
2. Scope of digitalisation of MSMEs to reduce the implementation time and cost, and promote innovation in the supply of finance for low-value or single transactions since major bottlenecks arise due to high-cost services and the cost of cyber security risk mitigation strategies.
3. Emerging solutions in financial technologies, such as network data, real-time payment behaviours, SaaS based technologies and optical character recognition.
