Exim Bank’s concept on trade finance ratified during CHOGM

An idea mooted by the Export-Import Bank of India (Exim Bank) was formalized during the recently concluded Commonwealth Heads of Government Meeting (CHOGM) in London. The Commonwealth Small States Trade Finance Facility (CSSTFF), conceptualized by Exim Bank, was signed during CHOGM-2018, also attended by the Hon’ble Prime Minister of India. CSSTFF is expected to substantially increase the availability of short-term credit (trade finance) for the Commonwealth member states which are mostly dependent on imports. Of the 53 Commonwealth member countries, 31 are small island states mainly in the Caribbean and the Pacific region. These island states lack scale and are not self-sufficient economies, needing to import most items including consumables. With the heightened risk perception on banks since the financial crisis, especially small banks in developing countries, and the Basel regulations on capital requirements, trade finance has become scarce. The CSSTFF addresses this constraint to ensure that trade flows are not hindered to these small island states. The Commonwealth Secretariat, London, had appointed Exim Bank to prepare a pre-feasibility report for setting up of a trade finance facility. Based on the recommendations of Exim Bank, the Commonwealth Secretariat constituted a Working Group comprising Exim Bank, International Finance Corporation-Washington and the Central Bank of Malta (the facility was to be housed in Malta).