Societe Generale India has used the Bolero platform to switch from traditional paper-based trade processes, digitising cross-border transactions for a major exporter, transferring documents electronically for speedier settlement.
In doing so, Societe Generale has tackled one of the biggest inefficiencies still faced in trade finance – paper-based documentation. At the centre of these transactions are Letters of Credit (“LC”) – a bank undertaking to pay the beneficiary (exporter) for a trade transaction subject to presentation of required documents that comply with the terms and conditions of the LC.
When paper documents are used, they must physically move from the beneficiary to its bank, and from that bank to the issuing bank, in a cross-border transaction. The physical transfer of paper from one party to the next party is time-consuming, and all too often the cargo shipped arrives at the port of destination before the documents arrive at the issuing bank, potentially leading to demurrage penalties and a significant delay in release of the goods to the importer.
By moving from paper to electronic records, the long transit times required for couriering are replaced by the quick electronic, push-button transmission of the documents. This speed of transfer addressed many of the challenges and risks faced by one of India’s largest exporters.
The use of electronic presentations on Bolero’s secure platform is not only more efficient in terms of speed but eliminates the risk of paper documents being lost in transit and mitigates the risk of fraud associated with modified or fake paper documents.
For this trade finance transaction, Societe Generale India used 100 per cent electronic presentation of their export Letters of Credit in support of a large shipment of petrochemicals from India to China. The electronic records included electronic Bills of Lading (“eBL”), issued and transferred using Bolero’s ePresentation solution. This radically shortened the payment settlement time due to elimination of all delays associated with paper documentation.
Antoine Castel, Chief Executive Officer, Societe Generale India described the significance of the transactions. “Societe Generale is adapting to innovative technology solutions to help clients bridge the transit time and provide them with speedier settlement in cross border trade. It is a great step forward in trade for one of our key clients, as it is making trade safer, smarter and faster,” he said.
Almost as significantly, this was also an early use of eUCP Version 2.0 (electronic supplement to the Uniform Rules and Practices for Documentary Credits). These are new rules on electronic Letters of Credit governing banks and trade finance organisations, that became effective in July 2019, published by the International Chamber of Commerce, Paris.