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Introduction of Digital Technologies necessary to bring change in finance system: Study

Updated: Mar 17, 2018 11:05:16am
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Introduction of Digital Technologies necessary to bring change in finance system: Study

New Delhi, Mar 17 (KNN) As per the recent study conducted by ASSOCHAM-Deloitte jointly titled “Role of trade finance for inclusive growth”, it has been found that for the improvement of current trade finance system, implementation of digital technologies is necessary.

According to the study report, implementation of digital technologies such as blockchain, artificial intelligence (AI), machine learning and robotic process automation can resolve the inefficiencies in India’s current trade finance system and make the process efficient at the bank’s, buyer’s, seller’s, as well as the SMEs/MSMEs end.

The report states "Banks in India should start conducting POCs (proof of concept) in this DLT (distributed ledger technology) to get a deeper understanding of its (blockchain technology) implications from the dimension of deployment in trade finance”.

The report further highlighted the implementation challenges that might come up and needs to be address with the adoption of blockchain like on-boarding users, regulatory acceptance, changing role of banks, infrastructural issues and firm/businesses operating on small scale.

Also the innovation in AI is moving at a faster space and has enormous applications to solve real problems and can be used to find transaction quality or can also provide an opportunity to market cross channels to make sure whether banks are utilizing their resources optimally, study stated.

Study further noted that due to increase in global trade growth in the first 6 months of the year 2017, global trade expansions occurred while India’s slow growth of trade during the year has been a matter of concern.

This short term down fall was due to the negative fallout from economic reforms such as demonetization and Goods and Service Tax (GST).

Further report claimed that India's trade deficit hit a 35 month high, at USD 14 billion as exports declined, for the first time in 14 months by 1.12 per cent in October 2017, to USD 23.1 billion.

Also exporters faced a liquidity crunch after paying GST for four months in a row without any refund and Fine-tuning GST data that feeds IT (information technology) platforms will have a major impact on trade finance, the study stated.

ASSOCHAM-Deloitte study lauded government initiatives and efforts for playing a major role in improving ease of doing business and bringing India’s rank from 130 in 2016 to current rank of 100.

India which majorly depends on key parameters like around-time and operating costs, major reliance on physical documentation, requirement of liaison with multiple stakeholders on disparate systems and lack of transparency, increase in cost of compliance act as a major barrier in the growth and development of trade as they limit the volume of trades and affects the speed and efficiency of trade finance, report stated. (With inputs from a media report) (KNN/YV)

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