Supply Chain financing’s picking up and BofA’s betting on it

Bank of America, which globally lends nearly $30 billion under this head, has already doubled its lending in supply chain financing in India.

“This segment is an exciting area for us; we have seen consistent growth in this segment all through the pandemic and it continues to be an area where many of our corporate customers are focused on,” said Sanchay Agrawal, India head, Global Transaction Services, Bank of America.

“Globally we provide roughly $30 billion annually in liquidity through our Global Supply Chain Finance programmes, having double-digit annual growth as new programmes are added, and existing programmes grow,” he said. Bank of America says Indian corporates are increasingly looking at providing liquidity support to their clients. “This growth is reflective of the needs of our clients, who look to support and protect their supply chain to provide liquidity to their suppliers,” Agrawal said.

“India is also one of the key markets for us in terms of trade financing…We are focused on servicing our corporate and institutional clients by bringing globally consistent and locally relevant solutions.”

Several top corporates have faced disruptions in the supply chain since the pandemic, and the situation hasn’t normalised yet due to the Russia-Ukraine war. While these impediments have eased since the middle of this year, they have not disappeared.

Zero-Covid policies in China are resulting in lockdowns in southern China and in the Beijing region, adding to supply-chain woes.

Amid the geopolitical disruptions, Bank of America believes supply chain finance is picking pace as large corporates look to hedge them of such sudden turbulence.

“These solutions have huge 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 programme… were able to recover the fastest… Those that did not have it or realised late, were quick to pivot and work on rolling out the same. This applies to large MNCs operating in India, too.”

Bank of America is seeking to create a large network of ecosystem players. For example, the bank is part of a consortium with Marco Polo network that’s creating a network of buyers and suppliers across key trade instruments utilising blockchain technology that can make it much easier to exchange trade information.