TRADE FINANCE VARIOUS PRODUCTS AND SERVICES OFFERED BY BANKING INSTITUTIONS

Introduction:

Trade finance uses various financial products to provide financial support in the sector of international trade and commerce. International trade finance encompasses a wide range of financial products, all of which are meant to facilitate easier trusted business for importers and exporters worldwide.

Banks’ Products Are Divided into Several Groups

A bank’s various products can be broadly categorized as follows:

1. Banking for the general public.
2. Finance for trade.
3. Treasury Management.

Retail banking and trade finance are handled at the branch level, whereas wholesale banking and treasury functions are held at the head office or designated branches.

Retail Banking:

Individual customers can use retail banking to manage their money, obtain credit, and deposit funds in a secure manner. Checking and savings accounts, personal loans, mortgages, credit cards, and certificates of deposit are among services provided by retail banks.

1. Loans, Cash Credit, and Overdraft Negotiation for Loans and Advances
2. Remittances
3. Keeping the books (maintaining all accounting records)
4. Receiving a variety of valuable bonds for safekeeping.

Trade Finance:

Trade finance refers to the provision of funds for commercial transactions, both domestic and foreign. A trading transaction necessitates both a buyer and a supplier of products and services. By financing the trade, various middlemen such as banks and financial institutions can facilitate these transactions.

1. Letters of credit are issued, advised  and may be confirmed.
2. Bills of exchange, promissory notes, draughts, bills of lading, and other securities are drawn, accepted, discounted, bought, sold, and collected.

Treasury Operations:     

Treasury management (or treasury operations) is the process of managing an organization’s assets to maximize liquidity and minimize operational, financial, and reputational risk.

1. Bullion buying and selling, as well as foreign exchange.
2. Buying, holding, underwriting, and trading in stocks, bonds, and other securities.
3. Bond and security purchases and sales on behalf of constituents.

Banks can also operate as a representative of the government or a municipal government. They insure, guarantee, underwrite, manage, and carry out the issuance of shares, debentures, and other securities.

Apart from the responsibilities mentioned above, the bank offers various other services such as investment advice, short-term money management, and portfolio management for both people and businesses. It handles inbound and outbound remittances about foreign exchange and various sorts of collecting for the government.

Internet-based financial transactions:

1. Companies are developing electronic reproductions of all existing paper-driven payment systems, including cash, cheques, credit cards, and coins.
2. Utility providers, loan payments, and other organizations employ an automatic payment system in which invoices are paid by direct withdrawal from a bank account.
3. Earnings (or government payments) are deposited into bank accounts automatically, saving time, effort, and money.
4. Prepaid cards for phone service, transit charges, highway tolls, laundry service, library fees, and school dinners are examples of stored value cards.
5. Transactions at the point of sale: Acceptance of ATM/Cheque for payment of products and services at retail businesses and restaurants.
6. Banking through online services is referred to as cyberbanking. Customers could check accounts, pay bills, transfer payments, and apply for loans on the Internet with banks with “Cyber” branches on their websites.

Conclusion:                

International trade improves the accumulation of human capital in the countries under discussion and contributes to sound economic growth through human capital accumulation.