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SINGAPORE: DBS Group and Standard Chartered are leading a group of 12 other banks in Singapore to create a digital trade finance registry in a bid to mitigate the risk of trade fraud and increase transparency.
The decision by commodity trading financiers in Singapore to create a central database to record financed trade transactions between banks comes after the industry lost billions of dollars due to a series of defaults and suspected cases. of commercial fraud this year.
The Commercial Financing Registry will also be able to mitigate duplicate financing from different bank lenders for the same commercial inventory, which will generate greater confidence among banks and merchants, according to a statement on Tuesday (October 6).
Developed on a blockchain network, DBS and Standard Chartered conducted the proof of concept for three months, with the support of 12 other banks. They include: ABN AMRO, ANZ, CIMB, Deutsche Bank, ICICI, Lloyds, Maybank, Natixis, OCBC, Rabobank, SMBC and UOB.
According to the statement, banks can now carry out validations only within a single client entity or in their individual banking network, “without taking into account what other banks have financed or assumed payment obligations.”
A digital trade registry can strengthen the ability of trade finance banks to avoid funding duplication and facilitate a more sustained flow of credit in trade finance, said Ms Ho Hern Shin, the Authority’s deputy managing director of banking and insurance. Monetary of Singapore.
“Building greater resilience in the industry ecosystem is even more important today as businesses and economies continue to grapple with the impact of prolonged business disruptions,” said Sriram Muthukrishnan, global director of business product management at DBS Bank.
“The Trade Finance Registry marks an important step towards promoting greater transparency through collaboration and strengthening of lending practices in Singapore’s banking sector, while ensuring a secure operating environment for the industry,” he added.
After completing the proof of concept, DBS and Standard Chartered will work with the Singapore Banking Association (ABS) to implement the registry as an industry utility to improve trade finance practices within Singapore, before expanding globally to cover major trading brokers at a later stage.
The registry will be administered by ABS, supported by a standing committee represented by the member banks of the ABS council.
Three bank working groups will also be established to jointly lead the governance, technical development and commercial scope of the project.
