Bank of America, which lends around $30 billion globally, has already doubled its lending in supply chain finance in India.
“This segment is an exciting area for us; we have seen steady growth in this segment during the pandemic and it remains an area where many of our corporate customers are focused,” said Sanchay Agarwalhead of india, Global Transaction ServicesBank of America.
“Globally, we provide approximately $30 billion annually in liquidity through our global supply chain finance programs, with double-digit annual growth as we add new programs and grow existing ones,” he added. Bank of America says Indian corporates are increasingly looking at providing liquidity support to their customers. “This growth reflects the needs of our customers, who are looking to support and protect their supply chains while providing liquidity to their suppliers,” Agarwal said. “India is also one of the key markets for us in terms of trade financing… We are focused on serving our corporate and institutional clients by bringing globally compatible and locally relevant solutions.”
Many top corporates have faced supply chain disruptions since the pandemic, and the situation is yet to return to normal due to the Russia-Ukraine war. Although these constraints have eased since the middle of this year, they have not disappeared.
Zero-Covid policies in China are exacerbating the supply-chain crisis due to lockdowns in southern China and the Beijing region.
Amid geopolitical disruptions, Bank of America believes supply chain finance is gaining momentum as large corporates try to insulate them from such sudden turbulence.
“These solutions have great potential, especially in the current scenario of changing supply chains, geopolitical uncertainty, and economic turbulence,” Agarwal said. “We have seen through the pandemic that companies with an established supply-chain financing program…were able to recover the fastest…those who did not have it or realized late were quicker to pivot And were working on rolling out the same. This also applies to large multinational companies operating in India.”
Bank of America is trying to build a large network of ecosystem players. For example, the bank is part of a consortium marco polo Network which is creating a network of buyers and suppliers in major trading instruments using blockchain technology which can make it much easier to exchange business information.