HSBC undertakes first e-Presentation of export documents for RIL

Instead of exchanging documents under a Letter of Credit through physical movement the partners would e-present documents through a digital platform built by London-based Bolero

HSBC and Reliance Industries Ltd announced that they have recently completed first of its kind digital transaction, e-Presentation, involving the electronic presentation of export documents under a Letter of Credit.

After the successful completion of the first e-Presentation transaction, HSBC India will make e-Presentation available to its other Global and Commercial Banking clients. "This paves the way for faster, cost-efficient settlement of cross-border trade," HSBC said in a statement.

Instead of exchanging documents under a Letter of Credit through physical movement, as would be normal practice, the partners would e-present 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 upto 15 days to settle," it said.

Aditya Gahlaut, Head of Global Trade and Receivables Finance for HSBC India, said: “This first step we’ve taken with e-Presentation which 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.”

The bank said even though the export growth rate is expected to outrun the country’s GDP growth which is at approximately 7.5%, cross border trade is regulated by multiple government agencies and involves extensive procedural requirements, making it paper intensive. Technology is thus expected to play a critical role 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.

Soumyo Dutta, group treasurer, 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”. Digitisation of trade communication and documentation is imperative both as an enabler for the growth as well as a tool for all stakeholders to monitor and facilitate the same.

Commenting on the deal, Stuart P Milne, Group General Manager & CEO, HSBC India, said “As the world’s leading international trade bank, we have the responsibility to play the 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.”