Soft Launch of the Trade Finance Project using SFMS Applications
The Indian Banks’ Association formally launched on 15th February 2007, a Pilot Project on Trade Finance using
SFMS Messaging format on the INFINET network connectivity provided by Institute for Development and Research in Banking Technology (IDRBT) set up by the Reserve Bank of India.
Structured Financial Messaging System (SFMS) is the secured messaging system developed by the IDRBT in the year 2002 and so far its usage had remained confined to payment and settlement systems applications like RTGS, NEFT etc., With about 25000 bank branches connected to the INFINET network, SFMS can be used for a host of intra bank and inter bank business communications.
The Pilot Project on Trade Finance was taken up by the IBA Standing Committee on Information Technology and Business Process Re-Engineering under the Chairmanship of Shri M V Nair, Chairman and Managing Director, Union Bank of India in August, 2006.
10 banks namely ICICI Bank Ltd, State Bank of India, Union Bank of India, Central Bank of India, HDFC Bank Ltd, IDBI Ltd, Standard Chartered Bank, Citibank N.A., Canara Bank and Andhra Bank have joined the project at the Soft Launch. A few Letters of Credit were opened and communicated through the network to the advising banks to mark to the launch of the project.
Banks in India would now be able to avoid paper based handling of Letters of Credits at the time of opening and negotiation of bills drawn against the Letters of Credit. Besides reducing transaction time and cost-thereby making trade finance operations more efficient, the electronic handling of communications would considerable reduce risk of fraudulent transactions.
IBA hopes other member banks connected to the INFINET would join the project soon. In due course, other business applications in the area of collections and remittance would also be started using SFMS.
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