Trade finance signifies financing for trade, and it concerns both domestic and international trade transactions. A trade transaction requires a seller of goods and services as well as a buyer.
Various intermediaries such as banks and financial institutions can facilitate these transactions by financing the trade through PetEx trading platform. The function of trade finance is to introduce a third-party to transactions to remove the payment risk and the supply risk.
Trade finance provides the exporter with receivables or payment according to the agreement while the importer might be extended credit to fulfil the trade order.
- Trade finance represents the financial instruments and products that are used by companies to facilitate domestic / international trade and commerce.
- Trade finance makes it possible and easier for industries, importers and exporters to transact business through trade.
- Trade finance can help reduce the risk associated with trade by reconciling the divergent needs of an buyer.
Services Offered by PetEx
- Electronic Spot Trading facility in multiple commodities with specific delivery centers across India.
- Facilitating collateral financing and borrowing against Installation / Warehouse receipts.
- Customized services relating to procurement, warehousing and finance
Since PetEx would be offering the above services, industries, traders, exporters, importers, banks, financial institutions etc will have the following opportunities available to them through the PetEx platform –
- Procurement for consumption in their plants on Ex-Terminal / Port locations enabled by PetEx.
- Financing to industries / exporters against Storage Receipts under cash credit terms.
- Finance the existing members / clients / end users of PetEx for their daily purchase requirements.
How does a financier become a member of PetEx
A financier or aggregator can become member of PetEx as becoming PetEx Business Partner (PBP). He (PBP) does not necessarily need any storage tanks or godown which is needed by industries who buy to use the product in their plant. They will also not need any licences which are needed for storage and consumption like Explosive licence, Solvent licence.
He can enroll Industries as its clients. If the industry has adequate licence he may enroll the industry under his membership where he will be allowed to trade directly in the exchange using his unique id. Needless to mention PBP will keep some deposit, charge margin and brokerage to safeguard his earning and risks.
Diagrammatically the process looks as follows :
As clear from the above, the client / industrial client will be trading directly in the PetEx platform and the seller will make the invoice directly to the client, hence PBP does not have any issues with GST or the licences required to deal with petroleum products.
For any clarification you may like to send a mail to email@example.com.