Yes Bank has launched a solution that uses robotics to digitise part of the trade finance payments process.
The tool automates the submission of the bill of entry, an account of traded goods entering the port.
A robotics solution then verifies the documentation, which is submitted digitally, by cross-checking it with the Indian government’s Import Data Payment and Monitoring System (IDPMS) or Export Data Processing and Monitoring System (EDPMS). Payment is then released, with the bank saying it has the potential to reduce payment turnaround time by 80%.
Yes Bank plans to roll the solution out to 2,000 corporate clients servicing markets in China, the US, Singapore, Germany and Hong Kong. The plan is to eventually “extend to other segments as appropriate, eventually to all trade finance products wherever applicable,” Asit Oberoi, global head of transaction banking, tells GTR.
The development comes one year after the Reserve Bank of India launched the IDPMS and EDPMS systems to help digitise trade in India, a move which has been widely hailed as improving efficiency in India.
“This solution would not have been possible without the visionary introduction of the IDPMS and EDPMS by the RBI,” Oberoi says.
It also comes on the back of the biggest financial fraud in India’s history. At a branch of Punjab National Bank (PNB), fraudulent letters of undertaking (LOUs) were used over a seven-year period to skim US$1.7bn from confirming banks overseas.
The RBI has responded by banning the LOU, while the clamour to further reduce the dependence on paper-based solutions among India’s trade finance banks has grown. Oberoi declined the chance to comment on the PNB situation, but did note that “import finance from overseas lenders on an LOU for direct import is not available now”.
Yes Bank claims to be the first Indian bank to digitise this part of the trade cycle, but there have been moves from foreign banks to take advantage of the RBI’s digital agenda.
In October last year, Deutsche Bank launched TradePay, the first paperless import payment solution in the country. The solution uses IDPMS to verify import payments by checking them against details made available by the client on the system, eliminating the need for clients to share any physical documentation.
This followed Citi launching a solution which allows clients to share import payment information with the bank by quoting the RBI’s IDPMS number, without having to share documents. This was launched in April 2017.
In the wake of the PNB fraud, we can expect to see digitisation gain pace. International banks have been reluctant to accept guarantees from import financing Indian banks, which has been choking importers from vital capital.