Banking & Financial Interventions to Boost

Manufacturing in India

Khushnama Davar (MD & Head Transaction Banking Sales)

Rajat Bahree (Director, Transaction Banking Sales)

February 2015

1. Innovative Solutions around bridging Working Capital Gaps– Banks perspective and

plans

2. Use of Information Technology to speed up and streamline delivery of

Working Capital Solutions

3. Facilitating International Trade

Key Themes Covered

Looking Forward: Our Clients’ most Common Priorities

Order to cash

Treasury management

Liquidity management

FX management

Investments

Funding

Risk management

Trade finance

Forecasting

Account management

Procurement to pay

Purchase order

Receive invoice

Accounts payable

Payment Reconcile

Offer Order Invoice Collect Reconcile

•Incomplete reference

information

•Unmatched items

requiring manual

reconciliation

•Diverse collection points and instruments

•Finality of settlement •Convenience and ease

of placing and

redeeming deposits

•Access to broad range

of investment options

•Balancing safety,

liquidity and yield

•Sub optimal use of

liquidity due to trapped

or idle cash

•Inadequate central

controls

•Cumbersome interco-

loan tracking

•Account receivables

and account payables

timing do not match

•Increased need for

working capital

•Incomplete and non-

timely visibility of

cash positions from

various subsidiaries

•Manual, error prone

process for

consolidating cash

flow from

subsidiaries

•Inaccurate sales

forecast and AR/ AP

positions

• Multiple bank

accounts, multiple

statement sources and

formats

•Cumbersome account

opening change

process

• Finality of settlement

•Tracking and enquiring payment status

• Managing multiple payment instruments, cut-off times

and settlement dates

•Inability to fully centralise all payments (e.g. tax

payments)

Seamless access and Information

Linking your Objectives to your Working Capital Needs

Sales

Stock Holding

Funding requirements (as liquidity tied up in

receivables) to expand sales

while managing buyer risk (Credit and

Country risk)

Competitive source of finance for buyers/

distributors to Support Sales growth

Production

Order

Payment to suppliers / vendors

in India & Abroad

Financial support for

manufacturing operations

Cash /

Capital

Receivables

Finished

Goods

Raw

Material

Work in

Progress

Avail innovative solutions like

Vendor Prepay and Bank Payment

Obligation.

Rationalise Multiple accounts in

multiple locations (across clearing

zones in India)

Optimize returns on

trapped cash & increase control

and visibility

Free up liquidity tied up

in inventory

4

Automated Financing for Suppliers (Vendor Prepay)

Objectives

Automated reconciliation of

payables

Cheaper source of finance

to suppliers

Reduction in DPO

View your payment instructions

4. Debit account & Update ERP on payment

effected

View receivables

5. Liquidate asset OR payment to

supplier for non discounted invoices

1. Post dated Payment file

3. Pre payment of the all/ selected

accepted invoices with advice

2. Request for finance

You Supplier

(s)

Financing your suppliers based on our relationship with you..

(SCB purchases the

receivable from supplier)

Benefits to you

Based on our relationship, your suppliers will have access to alternative source of working

capital. You may be able to extend your DPO

Reconciliation of payables and automated processes ensure that you know when payments to

your suppliers need to be made.

Providing cheaper source of finance to suppliers and improving their liquidity helps create

more sticky and long term relationship with suppliers.

Why SCB

Best Supply Chain Finance

Provider in Asia – Global

Finance

5

Procuring through Bank Payment Obligations

Compared to Letters of Credit

• Electronic presentation of data instead

of physical documents - Improve

quality and objectivity of compliance

verification

• Quicker process as it focuses only on

data relevant for financing

• Can be added at any time, for any

amount value

• Sellers gain certainty of the timing of

cash flow and can improve liquidity

forecasts

• Sellers may use BPO to get pre-/post-

shipment finance through their own

bank

• Sellers can offer commercial incentives

Benefits to you

Operational Efficiency - Faster access to documents to take delivery of goods as documents bypass the banking

channel. Quicker resolution of deviations (Amendments) as both buyer and seller interact on an online portal,

Straight2Bank. Faster clarification on discrepancies. Documents of title can be received directly. Faster turnaround time

through initiation of import transactions electronically and timely execution and coverage of data reconciliation

Risk management - Quicker assurance for buyers in terms of security of supply with increased visibility

Cost Savings - With the ability to add payment commitment later in the transaction lifecycle, cost savings can be

achieved as the BPO issuance costs applies only to the tenor the BPO is issued for. Lowered banking costs due to the

removal of hidden costs associated with traditional documentary trade. More efficient use of the banking credit lines as

a result of Increased flexibility.

6

LC

Issuing

Bank

LC

Advising

Bank

Buyer Seller

Contract

Do

cu

me

nts

Ap

plic

atio

n

Documents

Issuance

Do

cu

me

nts

Ad

vic

e

Letter of

Credit

BPO

Obligor

Bank

BPO

Recipient

Bank

Buyer Seller

Contract

Documents

Data

Data

Data

Bank Payment

Obligation

Payment Payment

vs Letter of Credit Bank Payment Obligations

Rationalize Account Structure, Optimize Trapped Cash &

allow visibility and control

Cross Border Interest Optimization*

Objectives:

Rationalise Multiple accounts in

multiple locations (across

clearing zones in India)

Optimize internally generated

cash

Increase overall control and

visibility

Benefits to you

Rationalise the number of Accounts held across cities within India from a single bank

Maximize the interest earned on net credit balance by domestic sweeping (3rd party bank

sweeping not permitted by regulation in India)

Notional Aggregation or Cross Border Sweeping for overall Control & Visibility and monitoring

purposes. (Interest optimization not allowed due to regulation in India)

UK

UAE

USD

R

UK C/A

USD

R

USD

R

GBP

R

UK C/A

GBP

R

GBP

R

USD

R

UAE C/A

USD

R

USD

R

AED

R

UAE C/A

AED

R

AED

R

Local Sweep

Sweep via Multi party entrustment loan

(Cross- City specific approvals might be required)

A/cs participating in notional aggregation (Interest optimisation not allowed)

Interest optimization

7

Why SCB

One of the largest foreign

banks in India with

branches across multiple

cities.

Best bank for Liquidity

Management in Asia,

Africa & Middle East

(Global Finance award)

Managing Payment efficiency through Multiple Purpose Driven

Choices

Client

Prints

out

Cheques

Multi – Print sites

Client

Onsite

Cheque

Printing-

Client PC

Beneficiary

Supplier’s bank

Reports

& Alerts

File / Data

Transfer

Domestic

Electronic

Payments

ACH /Pay &

RTGS

Treasury Transformation

Cheque

Print

File

Client Sends Payment

Instruction (pay type) to

Straight2bank

Host to Host

Infrastructure

connection to Client

Cheque Print Sites

Direct settlement to Beneficiary bank

- - -NEFT network (SCB is a direct

Clearing member)

Correspondent

bank

Route through

SWIFT network

Overseas

Supplier’s bank

Beneficiary

Objectives

Centrally Manage Multi-

location Supplier Payments

Automate the payment

processes & administration

and save on costs

Why SCB

SCB provides electronic access to a

fully automated ACH and RTGS

payment capability to more than

60,000+ branches / 90+ banks

Ability to offer innovative solutions

like Onsite Check Printing, 24 hour

book transfers, NACH, corporate

cheques on SBI stationary and IMPS.

8

Benefits to you

Enjoy float as account debited only upon cheque presentment

Centrally manage Multi-Location Supplier payments for faster turnaround time- Our

Straight2bank provides this automated capability.

Electronic Payments support payment to India wide ACH /RTGS connected branches and

Cheques through our direct clearing membership in India

Automation of payments via Straight2bank

…and Preventing Cheque frauds with “Positive Pay”

Client

Beneficiary

Beneficiary

Objectives

Centrally Manage Multi-

location Supplier Payments

Automate the payment

processes & administration

and save on costs

Why SCB

SCB provides electronic

access to a fully automated

ACH and RTGS payment

capability to more than

50,000+ branches / 84+

banks

9

We offer you

A market leading cheque fraud prevention tool in Asia

A secure mechanism with verification on:

– Cheque number and date

– Debit and credit account numbers

– Beneficiary name and amount

Corporate submits cheque issuance

information to

Bank Provider

In the event of a mismatch, the

information will be presented to the

corporate for verification

Bank provider matches issuance

information to those presented to

the bank by the clearing house for

payment

Monetize Your Receivables for Open account Sales and manage buyer & country risks

Objectives

Funding requirements (as

liquidity tied up in

receivables) while ensuring

that we Mitigate Buyer

(Credit & Country risk)

Manage Collections risk

Benefits to you

Off-balance sheet funding solution and an option of a ‘With recourse’ or “without recourse”

solution, Additional benefit of credit protection.

Cash upfront and flexibility in funding

Ability to offer competitive deferred payment terms to Your Buyer, potentially allowing you to

increase Sales

Control over collections from a widespread number of Buyers

Robust monitoring process for buyer payments and reconciliation of account receivables

Why SCB

Strong partnerships with

Insurance and

correspondent factors

Best Supply Chain

Finance Provider –

Global Finance

10

X

Credit Insurance SBLC Internal Limits Import Factors

Providing Short Term Pre-Shipment Financing for Supporting Manufacturing Operations

Objectives

Financial support for

manufacturing operations

Lower cost on FCY loan

You Buyer

1

2

5

Dispatches Purchase Order (PO)

Copy of Purchase Order

4

Dispatches Invoice, B/L and other documents

Copy of

documents

to bank

3

4a

Conversion to

Post Shipment

Finance

Funding against PO 6 Payment

on due

date

Benefits to you

Lower cost on FCY loan booking as compared to local currency financing in India.

Available in INR as well as FCY

Helps to maintain a better cash flow for your business as financing is available against every

confirmed export order.

Eliminates currency risk between receivables and bank payables

Why SCB

Robust and liquid balance

sheet

Liquidity available in US $

11

Buyer & Country Risk Mitigation - LC Confirmations

Objectives

Coverage of Buyer Credit

Risk

Coverage of Country Risk

With trade finance limits on over 1700 banks in over 100 countries, Standard Chartered offers various flexible solutions to help mitigate issuing bank and country risk for the countries that you export to.

29

LC Confirmation Foot Print (countries and # of banks)

148

26

8

304

83

Benefits to you

Standard Chartered offers various flexible solutions to help mitigate issuing bank and country risk

for your Export transactions

92

118

113

11

37

Why SCB

Strong presence in more than 90+ countries with 1,600 branches

Trade finance limits on over 1700 banks in over 100 countries

12

12

Monetise Inventory to free up liquidity

Objectives

Financing that will free up

liquidity tied up in inventory

Take advantage of

favourable market

conditions to build

inventory to maximise

profitability

Benefits to you

Access to incremental financing on the back of the collateral with lesser reliance on balance

sheet

Able to build inventory when conditions are favorable

Flexibility in amount of financing as it is tied to the market value of the commodity

Why SCB

Deep local presence in

more than 90+ markets in

Asia, Africa and the Middle

East

Footprint in the key

commodity countries

13

Supporting your Sales Growth by funding your Distributors

Objectives

Competitive source of

finance for distributors/

buyers

Ability to grow sales

Benefits to you

Increasing your sales by financing your distributors/ buyers (providing liquidity to your

distributors/buyers)

Helps create more sticky and long term relationship with the buyers

Upfront conversion of receivables into Cash

Reduced cost of collection

Why SCB

One of the leading

International banks to

offer buyer finance in

India .

Best Supply Chain

Finance Provider in Asia

– Global Finance

Goods + Bill + Invoice

Accepted Bill +

Invoice

Repayment on

due date

Contacts

buyer in case

of default Funds

Accepted Bill + Invoice + Transport

Docs Buyer You

1 2

3

4

14

Improving your Collections efficiencies through Virtual Accounts

Benefits to you

Immediate and unique payer level identification

Achieve faster reconciliation, reduce Day Sales Outstanding (DSO)

Increase sales by releasing client credit lines quicker

Reduce manual processing through straight-through cash application

We offer you

Single Virtual Account (across

paper/electronic and local and

foreign currencies) standardises

the cash application process

across payment methods,

currencies and markets

Flexible Virtual Account

options facilitating seamless

implementation since your

Buyer ID is used as the Virtual

Account

Enhanced reporting including

buyer name or

invoice/reference number

Integrated bank statement

becomes a single source of

transaction information such as

payer reference 15

Part A identifies client’s account

Part B identifies the Payer

Ability to Automate Reconciliation using Artificial Intelligence

Benefits to you

Artificial Intelligence: learns from manual processing and incorporates the learning in subsequent runs

Automated reconciliation: ensures that receipts are automatically reconciled against outstanding invoices

Powerful pattern recognition tools: automate data extraction and enrichment to capture human provided

information

Advance exception management: triggers workflows, auto identifies, queues, tracks and monitors exceptions to

expedite exception resolution

Analytics Dashboard: provides slicing and dicing of data-dimensions with drill down on areas of focus.

We offer you

Self-identification of automation

opportunities

Powerful pattern recognition:

automate data extraction and

enrichment from unstructured

information

Learn from experience; AND

manual actions performed on

unmatched transactions

Give suggestions with indicative

confidence level, allow user to

accept or reject

16

Migrating Distributors to NACH debits

Benefits to you

Reduction in bank accounts since NACH allows pulling of funds without opening an additional

account

Migrating to electronic collections in its entirety.

Existing bank accounts of dealers can continue with the convenience a one-time mandates to

their existing bankers

Operational efficiency since no housing, monitoring or lodgement of physical cheques into the

system

Uniformity

• Central eco system for electronic payment

• Standard operating and business rules pan India

Accessibility

• Pan India access to all participants

• Process file based transactions

Security & convenience

• Web based Centralized solution with in-built security features and multi-level data validation facility.

• Web based Mandate Management module along with on-line Dispute Management module

17

Client

NACH File

Back Office systems

Debit Dealer / Distributor

ERP

File

validatio

n

NACH Clearing

System

Destinatio

n bank

Validation of mandates and

confirmation of successful

upload

File

distributio

n

Confirmation

of debit /

return

Debit /

Reject

Reverse file

for success /

return

1 2

3

4 5

6 7

8

9 10

Standard Chartered

Standard Chartered Bank - 160+ year history across emerging markets

We bank the people and companies driving investment, trade and the

creation of wealth across Asia, Africa and the Middle East.

Robust and liquid balance sheet, strongly capitalised and predominantly deposit funded franchise

Financial

Strength

Dynamic

Markets

Unrivalled presence in growth markets of Asia, Africa and the Middle East Present in Australia, Europe and the Americas to facilitate cross-border transactions.

Deep local

knowledge

International network with local knowledge Providing access to markets, assets and capital across our footprint A diverse group of people challenging the norm to generate value for you

132 Nationalities

Client

Spectrum

Customised, value-added solutions to meet your needs across the spectrum Here for good: We stay open for our clients, even in difficult times.

A+/A1/AA- S&P/Moody’s/Fitch Credit Ratings

11.8% Core tier 1 capital ratio

4% Trading assets to total assets

76% Advances to deposit ratio

Global Reach - Over 150,000 touch points across 90+ markets

Franchise country with partner banks

Franchise country without partners

Origination country with alliance banks

Origination country without alliance banks

Non presence country with alliance banks

Standard Chartered has a network of over 1,200 own branches and outlets in 40+ countries across Asia, Africa and

Middle East providing transaction banking services

Through our branches, outlets and partners we have over 150,000 touch points across 90+ markets across the globe

COUNTRY BREAKDOWN Botswana 18 18

China 104 66,156

Ghana 28 110

Hong Kong SAR 78 900

India 100 46,946

Indonesia 26 1185

Kenya 39 139

Malaysia 39 40

Nepal 15 15

Nigeria 44 1328

Pakistan 116 2,516

Singapore 18 c.750

South Korea 302 331

Taiwan 88 c.11,275

Thailand 26 c.11,140

Uganda 12 63

United Arab Emirates 11 c.110

Zambia 21 103

Zimbabwe 26 26

20+ Other Presence

Countries 138 10,524

40+ Non Presence

Countries 1,093

Total 90+ countries 1200+ 150,000+ Branches, implants, subsidiaries and offices of

SCB PLC

Total touch points including partners

Our aspirations

Relationships

► Build trusted relationships with the people, companies and institutions shaping our

markets’ future

Investment

► Play a leading role in facilitating investment and deepening financial markets in our

economies

Trade

► Become the undisputed leader in commercial payment and financing for and in Asia,

Africa and the Middle East

Wealth

► Be recognised as a leader in growing and protecting our clients’ wealth

Relevant scale

► Establish sufficient scale, balance sheet and franchise strength to be relevant and

influential in our key markets

Reported results

Profit before tax

$3,268m H1 2013: $4,088m /

H2 2013: $2,870m

Loans and advances to customers

$305bn H1 2013: $292bn /

H2 2013: $296bn

Customer deposits

$391bn H1 2013: $381bn / H2 2013: $391bn

Capital and liquidity metrics

Total capital ratio

17.3% (CRD IV)

H1 2013: 16.9% (Basel II) /

H2 2013: 17.0% (CRD IV)

Common Equity Tier 1 (CET1) ratio

10.5% (CRD IV)

H1 2013: 11.4% (Core Tier 1 ratio – Basel

II) /

H2 2013: 10.9% (CET1 ratio – CRD IV)

Advances-to-deposits ratio

78.1% H1 2013: 76.6% / H2 2013: 75.7%

CET1 ratio (end point basis)

10.7% (CRD IV)

Liquid asset ratio

30.5% H1 2013: 28.3% / H2 2013: 29.8%

Financial strength working for you

Financial highlights For the six months ended 30 June 2014

Strong credentials

Primary listings in London, Hong Kong and Mumbai

top 20 in FTSE 100 Index

We bank the people and companies driving

investment, trade and the creation of wealth

across Asia, Africa and the Middle East.

22 Credentials

Credit ratings

A+/A1/AA-

(S&P/Moody’s/Fitch)

Well-positioned for future growth

Our global market position and share (%) Confidence in the growth prospects of our

markets

2013-2019 forecast GDP and trade growth (CAGR%)

6.4% 8.6%

3.9% 7.7%

4.5%

10.8%

7.0% 3.9%

5.7% 6.2%

6.8% 6.5%

4.1% 5.2%

3.5%

8.2%

3.0% 6.4%

5.2% 5.2%

Source: 1 Market Research, International Monetary Fund; 2 Oliver Wyman, Standard Chartered

analysis: 3 Thomson Reuters; 4 CHIPS, as at 30 Sept 2014

#2 6%

#2 10%

#7 7%

2

3

4

1

“Here for good is about our commitment to our customers, our

markets and ourselves. It is us at our best.”

Peter Sands

Group Chief Executive

Our Capabilities: Transaction Banking

Transaction Banking

Cash Management • Payments (Domestic & Cross-border)

• Collections (including Mobile)

• Liquidity management

• Account services

Trade Finance • Letter of Credit Issuance

• Import and Export Financing

• Open Account Trade - Supply Chain Financing, Receivable services,

Structured Warehouse Financing

• Trade Guarantees

• Bank Payment Obligation (BPO)

• Bill Discounting on Buyer Risk (BDBR)

Securities Services • Custody and Clearing

• Fund Accounting Services

• Escrow Services

• Derivatives Clearing Services

• Securities Lending & Borrowing Services

• Qualified Foreign Investors (QFIs)

Electronic Channels • Web (Cash, Trade & Custody)

• H2H (Cash)

• ERP Integration (Cash & Trade)

• Expertise in SAP XI and Oracle e-business suite (Cash)

Local expertise + Global capability ► Full range of innovative solutions

Network: Own branch nearly double of nearest foreign bank, Largest Correspondent Bank

tie-ups in India

Trade Corridors: Ability to provide solutions across geographies. Helping clients manage cross-border supply chains

and banking relationships smoothly

Full capability on RMB including LC issuance, Advising and Remittances

Recent Awards

The Asset Triple A Awards

Best in Working Capital and Trade Finance (2013 -

2014)

Best Transaction Bank (2013)

Global Finance Awards

Best Global Integrated Trade, Supply Chain Finance and

Cash Management Solutions (2013 - 2014)

Best Supply Chain Finance Provider in Middle East

(2014)

Best Sub custodian Bank in India (2014)

Bank Sierra Leone, Gambia and Cote d’Ivoire (2014)

Best Consumer Internet Bank (Global, Africa) (2014)

The Banker Transaction Banking Awards

Best Global Transaction Bank (2014)

Best Transaction Bank for Cash Management (2014)

Best Transaction Bank from Europe (2014)

Financial World Innovation Awards

Winner: Innovation in Cash Management or Treasury

Services for Straight2Bank Liquidity

Euromoney Awards

Best Transaction Services House in Africa (2014)

Best Transaction Services House in the Middle

East(2014)

Best Structured Products House (2014)

Best Bank in Zambia (2014)

#1 African Currencies (2014)

Disclaimer

This material has been prepared by Standard Chartered Bank (SCB), a firm authorised by the United Kingdom’s Prudential Regulation Authority and regulated by the United

Kingdom’s Financial Conduct Authority and Prudential Regulation Authority. This material is not research material and does not represent the views of the SCB research

department. This material has been produced for reference and is not independent research or a research recommendation and should therefore not be relied upon as such. It

is not directed at Retail Clients in the European Economic Area as defined by Directive 2004/39/EC neither has it been prepared in accordance with legal requirements

designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

It is for information and discussion purposes only and does not constitute an invitation, recommendation or offer to subscribe for or purchase any of the products or services

mentioned or to enter into any transaction. The information herein is not intended to be used as a general guide to investing and does not constitute investment advice or as a

source of any specific investment recommendations as it has not been prepared with regard to the specific investment objectives, financial situation or particular needs of any

particular person.

Information contained herein, which is subject to change at any time without notice, has been obtained from sources believed to be reliable. Some of the information

appearing herein may have been obtained from public sources and while SCB believes such information to be reliable, it has not been independently verified by SCB. Any

opinions or views of third parties expressed in this material are those of the third parties identified, and not of SCB or its affiliates. While all reasonable care has been taken in

preparing this material, SCB and its affiliates make no representation or warranty as to its accuracy or completeness, and no responsibility or liability is accepted for any

errors of fact, omission or for any opinion expressed herein. SCB or its affiliates may not have the necessary licenses to provide services or offer products in all countries or

such provision of services or offering of products may be subject to the regulatory requirements of each jurisdiction and you should check with your relationship manager or

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This material is not independent of SCB’s or its affiliates’ own trading strategies or positions. Therefore, it is possible, and you should assume, that SCB and/or its affiliates

has a material interest in one or more of the financial instruments mentioned herein. If specific companies are mentioned in this communication, please note that SCB and/or

its affiliates may at times seek to do business with the companies covered in this material; hold a position in, or have economic exposure to, such companies; and/or invest in

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performing financial or advisory services in relation to any of the products referred to in this communication. Accordingly, SCB and/or its affiliates may have a conflict of

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Appendices

In-House

Bank SSC / Payments

Factory

Full Service

Treasury Centre

Basic Treasury

Centre

Decentralised

Partnering in your Treasury Transformational Journey

ROB

Degree of Sophistication

Company Objective V

isib

ilit

y

Co

ntr

ol

Op

tim

sa

tio

n

Basic visibility over

positions

Coordinate

cash mgt,

funding, FX

Actively

manage debt,

FX, liquidity

Centralise

payments /

collections

Deliver

Banking

Services

Internally