Supply Chain Finance Model: A Banker’s Perspective in India

Abstract

SCF is typically a combination of services and technology solutions that links buyers, suppliers, and finance providers to improve the visibility, financing cost, availability, and delivery of cash when supply chain events take place. Companies and their banks are working together to develop finance solutions encompassing the entire supply chain. SCF gives trade banks the tools they need to align their offerings with their customers' evolving supply chain needs. This paper provides background on the growing importance of SCF, delving into the key elements and available options from which these solutions are crafted and implemented. While the market for SCF is still in the early stages of development, innovative banks already have made heavy investments in it and others will be quick to follow. Those who seize this opportunity will transform their businesses into ones that align with, and plug into, their customers' quickly evolving supply chain strategies. It also explores current models and practice regarding the dynamics of financial flows along global supply networks. Based on data collected from two main SCF provider banks of India, the paper identifies and discusses requirements for improved solutions to supply chain finance challenges. This research is particularly relevant in the light of the disruptions that the global credit crunch has brought to financial systems, and the changes that are likely as responses to these disruptions.