1. TRADE FINANCE SERVICES TO SMEs IN LUDHIANA BY HSBC Presented by: NITIN KOCHHAR MBA 2C

3. One of the world’s largest banking & financial services organization

4. 8,000 offices in 88 countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa

5. Serves over 100 million personal and almost three million commercial customers

7. Thomas Sutherland is known to be the founder of the bank.

8. Started with an initial capital of HK$5 million.

9. Bank was founded in 1865 and opened for business in Hong Kong on 3rd March 1865.

10. Acted as a banker to the Hong Kong govt.

12. To become the first choice of their customers.

13. To be recognised as the world’s respected financial services employer.

14. To generate best returns to its shareholders.

16. The Hong Kong & Shanghai Banking Corporation Limited (HBAP) commenced its operations in 1867 in India.

17. In 1959, The HSBC Limited acquired The Mercantile Bank.

18. Currently having a network of 50 branches in India with 155 ATMs at 126 locations.

20. Richard Collie : Chief Financial Officer (CFO)

21. Tarun Kataria : Head of Global Banking and Markets

22. Hitendra Dave : Head of Global Markets

23. Ravininder Singh : Head of Corporate Banking

24. Puneet Chaddha : Head of Commercial Banking

25. Rajnish Bahl : Head of Personal Financial Services

26. Ramnath Krishnan : Head of Private Banking

27. Ravi Menon : Head of Corporate Strategy & Development

28. TanujKapilashrami : Head of Human Resources

31. In 2010, won the Innovation in Recruitment – Employer Branding Award

32. In 2009, HSBC was the proud recipient of two awards at the first ever Dun & Bradstreet Bank Awards – for Best Asset Quality – Foreign Banks and Best SME Financing –Foreign Banks.

33. HSBC was adjudged as the Best Securities Services Provider in India by AsianInvestor in the AsianInvestor Service Provider Awards, 2009.

34. HSBC equity fund was ranked 5 star fund by Value Research Online in March 2009.

38. Backbone for developing country like India

39. 45% of Industrial Output

40. Produces more than 6000 quality goods

41. Creates 1 million jobs every year

43. Significant export earnings

44. Low investment requirements

45. Operational flexibility

46. Location wise mobility

47. Low intensive imports

49. Limited knowledge and non-availability of suitable technology

50. Low production capacity

51. Ineffective marketing and identification of new markets

53. Different from commercial lending, mortgage lending or insurance.

56. HSBC GLOBAL TRADE SOLUTIONS

58. Advance Payment

59. Documentary Credit

62. Commonly known as Letter of Credit (L/C)

63. The document is issued by a financial organization at the buyer’s request.

66. Seller’s Bank – Also known as Advising Bank/Confirming Bank/Negotiating Bank/Remitting Bank

68. Irrevocable Letter of Credit

69. Confirmed Letter of Credit

70. Sight Credit and Usance Credit

71. Transferable Letter of Credit

73. Functions of the Advising Bank (Governed by Article 7 of UCPDC 500)Authenticate the DC Verifies DC is “workable” Collects advising commission and despatches DC to the beneficiary Evaluates DC for confirmation, if requested

75. DC NEGOTIATION/DISCOUNTING– When the exporter requires funds before due date then he can discount or negotiate the LCs with the negotiating bank.

76. The first condition to discount an LC is that it should be a Usance LC.

78. DOCUMENTARY COLLECTIONS Payment Collection against Bills also known Documentary Collection. Bank only acts as a medium for the transfer of documents but does not make any payment guarantee Collection of documents is subjected to the Uniform Rules for Collections published by the International Chamber of Commerce (ICC)

79. TYPES OF DOCUMENTARY COLLECTIONS Documents against Payment (D/P) Documents against acceptance (D/A)

81. The collecting bank hands over the shipping documents including the document of title (bill of lading) only when the importer has paid the bill.

82. These terms are used when a collection order does not contain a bill of exchange.

83. The exporter keeps control of the goods (through the banks) until the importer pays

84. Documents against Acceptance

85. The Exporter allows credit to Importer, the period of credit is referred to as Usance

88. The offshore branch credits the nostro of the bank in India and the Indian bank uses the funds and makes the payment to the exporter’s bank as an import bill payment on due date.

89. The importer reflects the buyers credit as a loan in the balance sheet.

91. The importer can deal with exporter on sight basis, negotiate a better discount and use the buyers credit route to avail financing.

92. The funding currency can be in any FCY (USD, GBP, EURO, JPY etc.) depending on the choice of the customer.

94. Arrangement fees: This is charged by HSBC India for arranging the funds for the transaction.

96. Drawee bank is not just giving an acceptance on behalf of the customer, but is co accepting the bills which mean even in the event of the importer not paying, the drawee bank will pay HSBC.

99. Exporter approaches the forfeiter to ascertain the terms of forfeiting

100. Forfeiter estimates risk involved in it and then quotes the discount rate.

101. Exporter signs a contract with the forfeiter

104. Simple to operate

105. No protection against movement in rates

106. FORWARDS

107. Allows a firm to book an exchange rate now, for payment in future

108. Eliminates the risk of fluctuating exchange rates

109. Options

110. It gives the right but not the obligation, to buy or sell one currency against delivery of another at a specific rate on a specific date .

113. Clients do not operate their current accounts for a long time.

115. To know the factors influencing the selection of a bank to avail Trade services.

117. RESEARCH DESIGNExploratory Research Design Descriptive Research Design Causal Research Design

119. Sampling Unit – Any SME using the services of HSBC.

120. Sample size – 30 SMEs in Ludhiana having current account with HSBC

121. Sampling technique

122. Probability sampling technique

124. Structured Questionnaire

125. Secondary Data

126. Magazine articles

127. Journals

140. SME clients are aware about Documentary Credits, Buyer’s Credit & Import payments while its other trade products like Forfeiting, Avalisation are not known to its SME clients.