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The Following Blog Post Was Made On:
Husking Trade Finance
Hello Everybody,
Many of you know that for years I have worked as a trade finance banker. Since long, the law of international trade fascinates me a lot. I have spend years in reading different texts, trying to understand the complicated nature of international trade law. Some of the questions were answered while many are yet to be answered. But there is one simple question that no text talks about. The question is, "If 90% of the documents under LC is discrepant, then in 90% cases there is technically no undertaking from an issuing bank and yet the rate of failure under the LC is less than 1%. That means 99% of the Applicants and Beneficiaries don't care much about the rules and are shorting issues between themselves. Why on earth do we need so many rules then?"
Anyway, recently I SHIPPED myself to a different country which is really far far away (7735 miles to be precise :) ) and decided to do something other than banking. Now there has been saying back home, "Husking Machine Will Always Husk The Rice Whether In Heaven Or In Hell." And thus I found a job in a company which deals with Trade Finance Software for Corporate. So I started Husking Trade Finance here, again. But this time the perspective is different. When I was in the bank, the customers came with specific transaction requests (mostly LCs and Documentary Collections) and I knew only that part. It was like information from many customers but linear in nature. But this time, I am somewhere between "many corporate" and "many banks" and therefore able to have a glimpse of the broader picture. The new picture is quite interesting.
I tried to make a comparison between these two pictures. But couldn't do it. Because, they belong to the same eco-system. Then why I am calling this new picture interesting? Because, as a banker, all I knew about the rules which seriously affects about 1% of the international trade. However, now I have found a new factor that have (and will have ) far more impact on the way we do international trade today. That factor is technology...
I will write more about these "Trade Tech" in my next posts. Please bear with me till then.
Shahriar