Structured Finance through Collateral Management P V Ananthakrishnan Executive Vice President &...
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Transcript of Structured Finance through Collateral Management P V Ananthakrishnan Executive Vice President &...
Structured Finance through Collateral Management
P V AnanthakrishnanP V AnanthakrishnanExecutive Vice President &Head, Commodity Business
Structured Finance An art of transferring the risks from
parties less able to bear them to those more equipped to bear them.
Move the risk away from the party which is being financed
Conversion of Wealth to Capital Plantations, Oil etc
Why Structured Finance
Traditional Bank Finance Primary Risk on Borrower Financials of borrower – Key element Other Collateral – Secondary
Borrower can’t optimize their working capital requirements
High interest due to higher risk Financing to new Companies
Structured Commodity Finance
Primary risk on underlying commodity Storage/Control of commodity
With neutral party Borrower Profile/Financials
Secondary comfort
Structured Commodity FinanceFacilitators…
Warehousing Infrastructure Logistics Management Quality Assaying Insurance Exit Options
Collateral Management
Essential component of effective credit risk management
One of the method of securing the loan with physical commodity
Process comprises of Bank, Borrower & Collateral Manager
Collateral Manager must enjoy fiduciary trust of Borrower & Bank
Warehouse Receipt Finance
Collateral Manager
Warehouse
BankBorrower
Disbursement of loan
Control
Commodity
Quality TestingQuantity CheckingLogistics
Acceptance for storage
Issue of receipt
Regular monitoring
Procurement
AcceptabilityOf Warehouse
Lien marking
Tripartite agreement
Service Provider
WarehouseService Provider
Farmer CommodityCollateralManager
Bank
MobilizesBusiness
LogisticsMgnt
QualityCheck
Control &Monitor
Warehouse ReceiptWith lien markingDisbursement
thru SP
Deposit of Commodities
Import Trade
Collateral Manager
OverseasSupplier
Indian Buyer Bank
PurchaseContract
TripartiteAgreement
LC facility
CommodityAs per
LC Terms
Warehouse
Shipment
PledgeTo Bank
Repayment
PledgeRelease
Monitoring & supervision
Clearance & logistics
Export Trade
Collateral Manager
OverseasBuyer
Indian Supplier
Bank
SaleContract
TripartiteAgreement
LC facility CommodityAs per
LC Terms
WarehousePledgeOf commodityRepayment through
LC payments
Shipment
Release ofpledge
Logistics
Collateral Management
“Collateral Management enables the lenders to set up operational risk parameters while lending and also to control and monitor these parameters”
Our Experience
Structured Financing Bulk Financing Service Provider
About 50 Commodities Over 500 locations
Challenges
Financial Soundness of Collateral Manager
Integrated Solutions Quality Storage Capacity Comprehensive Insurance Cover Uniform laws covering multiple acts /
licensing requirements Vibrant Futures Market
Thanks