BANKING AFFAIRS

Detailed explanation-1: -Bank-intermediated trade finance (or trade finance, in short) performs two vital roles: providing working capital tied to and in support of international trade transactions, and/or providing means to reduce payment risk.

Detailed explanation-2: -Trade finance represents the financial instruments and products that are used by companies to facilitate international trade and commerce. Trade finance makes it possible and easier for importers and exporters to transact business through trade.

Detailed explanation-3: -Trade Finance deals typically involve at least three parties: the exporter (seller), the importer (buyer) and the financier, and differ from other types of credit products as transactions should have the following features: An underlying supply of a product or service. A purchase and sales contract.

Detailed explanation-4: -Examples of trade finance products and services include: A bank guarantee: When a bank acts as a guarantor in case the importer or exporter fails to fulfil the terms and conditions of the contract. This means the bank would pay a sum of money to the beneficiary.