Society for Worldwide Interbank Financial Telecommunication better known as SWIFT is a worldwide messaging platform for Banks and Corporate. The body has been working towards strengthening the financial community to exchange automated, standardized financial information securely and reliably.
SWIFT India is a leading provider of secure financial messaging services for the global financial sector. Working with SWIFT systems allows financial institutions and banks reduce cost and risks while improving compliance. SWIFT India is committed to offering significant value to the Indian financial community through digitization of trade.
Let’s take a look at the various interesting updates and development initiatives taken forward by SWIFT India towards meeting the goals of digitization of trade to make processes more transparent, modern and agile.
Trade Receivables Discounting System (TReDS) or bill discounting exchange is a Blockchain Platform that was developed by MonetaGo. This new development was taken forward by SWIFT India in collaboration with MonetaGo. The project ushers great hope for the industry as it addresses the pressing need for fraud mitigation and avoids double financing. Using these systems, an individual can easily check the authenticity of the e-way bill swiftly and with precision.
Further, SWIFT India has also partnered with 34 international banks such as the Commerzbank, Societe Generate Bank, Deutsche Bank, and JP Morgan Chase Bank to create a Blockchain platform for the Nostro accounts. This kind of account is held by a domestic bank with a foreign bank to facilitate trade financing and other cross border transactions. By automating trade finance, banks can leverage credit functions. Needless to say, India’s aggregate trade value is sizeable and has the potential to grow even further if the mechanism becomes standardized.
Banks with the adoption of Blockchain platform have started witnessing the following benefits-
Blockchain also known as Distributed Ledger Technology (DLT) allows monitoring of real-time liquidity flow, easy reconciliation, transaction status updates, full audit trails and visibility of expected and available balances. However, the time of need is going for an integration of the DLT with the existing system. Banks and financial institutions must work on to improve their existing technology infrastructure from the bottom up.
Progress So Far...
While the test case was successful, Blockchain technology is at its nascent stage and requires considerable development before handling billions of dollars of daily cross-border transactions between banks.
The pilot project used 528 channels whereas 10,000 channels need to be covered to include all Nostro accounts, held by the 34 banks worldwide. This platform also needs development “before it will be ready to support production-grade applications in large scale, mission-critical global infrastructure”
Thus, it will be a really interesting phenomenon to watch out how SWIFT India and MonetaGo Blockchain project development and implementation of the DLT platform helps the banking sector improve the operational levels in better directions.
Adopting Digitisation in Full Swing
Going by what data reflects, India's total trade value which includes both Import plus export is about $700 billion. This number is important as it is about 40% of India’s total GDP and if India has to maintain this ratio it will have to increase total trade to approximately $2 trillion. It is because of this that, Standardization of Trade Finance Services will impact ease of doing business in India. Digitization targets every integral part of the trade- from movement of goods to documents to funds. (Data source).
For the Corporate, SWIFT India had introduced initiatives such as SWIFT GPI which assists them to grow businesses overseas. The system is designed in a way which assists it to receive enhanced payment services directly from the banks, avail funds on the same day and offer end-to-end tracking of funds in real-time.
Besides SWIFT GPI initiative, SWIFT India is also working on the initiative to create a community around APIs, data and beyond. Data in the technology world is often denoted as modern-day crude oil. It fuels decision and taking the right decision is what all businesses strive towards. Using enhanced technology assistance, lenders are now at a much better position to take up informed and measured credit decisions. Data is available to them right on their fingertips which say a year back or so was nothing but an imagination.
Financial institutions are finding it beneficial; as in real-time they can now avail support mechanism that makes their backend work easier.
Digitization has not only brought in transparency and cost efficiency but it has also managed to shrink the supply chain timelines. Time in the present world is considered equivalent to an asset. So the more time is managed well, the more corporate are able to devote the saved time on productive tasks which yield them more profitability.
We at Myforexeye, support any digital initiatives taken up by the Government of India and other bodies. We, as an emerging Fintech Company of India, have created our own in house secured platform both web and mobile application for the Corporate and MSMEs who are into International trade business to find real-time support in Forex management and Trade Finance Services. Using our digital platform the exporters and importers of India can quickly avail quotes on cost-effective interest rates on Trade Credits and other relevant assistance in the same area. We value the needs and concerns of the businesses. Our trade digitalized support will add value to the businesses in managing their working capital concerns in an optimal way.
14 Nov 2019 02:54 PM
A foreign exchange transaction is recorded in the books of accounts at an exchange rate though the payment is made at a different exchange rate. This leads to transactional foreign exchange loss or gain.
07 Nov 2019 10:48 AM
Modern foreign exchange market started its shift from a fixed exchange rate to a floating exchange rate system. Thus a global decentralized, over the counter (OTC) market for trading of currencies evolved which determines the forex rates.
29 Oct 2019 05:00 PM
Trading in the financial markets is what increases the volumes especially when some markets are open across the borders over different time zones. Each market has its underlying asset which is tradable over the exchange.
23 Oct 2019 04:10 PM
Foreign exchange or forex or FX risk management is the strategy devised to mitigate the possible effects of the forex fluctuations on assets, liabilities or cash flows.
21 Oct 2019 04:48 PM
The implied volatility is higher than the historical volatility. So in a fx market, FX volatility is high and a seasoned trader incorporates volatility in his trading plan.
16 Oct 2019 04:12 PM
Excess of exports over imports results in a trade surplus which indicated a growth in the economy as there is more surplus funds at the hands of the consumers.