Trade Finance Forum › Forums › Market Regulations › Laws and Bills › What are the key differences between domestic and international trade finance regulations?
- This topic has 2 replies, 3 voices, and was last updated 1 year, 11 months ago by
John Babu.
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January 19, 2023 at 11:18 am #1842
Farhana BegumParticipantWhat are the key differences between domestic and international trade finance regulations?
January 20, 2023 at 11:28 am #1847
Joel RichardParticipantIndian trade finance regulations differ from international regulations in a few ways:
- Compliance with local laws and regulations: Indian trade finance regulations require compliance with local laws and regulations, such as the Foreign Exchange Management Act (FEMA) and the Reserve Bank of India (RBI) regulations.
- Exchange control regulations: International trade finance is not subject to exchange control regulations, while in India, trade finance transactions are subject to strict exchange control regulations.
- Documentary requirements: Indian trade finance regulations have more stringent documentary requirements compared to international regulations.
- Letter of Credit: Indian trade finance regulations requires that all letters of credit must be confirmed by an Indian bank, while international regulations do not have such a requirement.
- Risk assessment: Indian trade finance regulations require a more stringent risk assessment process to ensure compliance with local laws and regulations.
The Monetary Authority of Singapore (MAS) is the main regulatory body for trade finance in Singapore. Some key regulations that Triterras would have to comply with in Singapore include:
- Compliance with anti-money laundering (AML) and countering the financing of terrorism (CFT) regulations.
- Compliance with the Payment Services Act (PSA) and the Securities and Futures Act (SFA) for fintech companies.
- Compliance with the Code of Conduct for Commercial Banks, which sets out the standards of conduct for banks in Singapore.
In addition, Triterras as a Singapore-based fintech stock company, would also be subject to regulations set by the Association of Banks in Singapore (ABS) and the Singapore Foreign Exchange Market Committee (SFEMC).
January 21, 2023 at 11:30 am #1848
John BabuParticipantThere are several key differences between Indian and international trade finance regulations, including:
- Foreign exchange regulations: India has strict foreign exchange regulations in place, which can make it more difficult for businesses to engage in international trade.
- Trade financing: India has a more developed domestic trade financing market, which can make it easier for businesses to secure financing for domestic trade, but more difficult for businesses to secure financing for international trade.
- Risk management: International trade finance regulations tend to place a greater emphasis on risk management and compliance, which can make it more difficult for businesses to engage in international trade.
- Legal framework: India has a more complex legal framework for trade finance, which can make it more difficult for businesses to navigate the regulations and requirements.
- Collateral requirements: International trade finance regulations often require more extensive collateral to secure a loan, which can make it more difficult for small and medium-sized enterprises to secure financing.
- KYC norms: Different countries have different KYC norms and India is no exception, Indian banks and financial institutions have more stringent KYC norms than international institutions.
- Credit scoring: There is a difference in credit scoring and rating system in India and other countries, which can have an impact on trade finance availability.
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