Digital bank guarantees: Private sector lender HSBC India has launched electronic bank guarantee services for its MSMEs and corporate clients in association with National E-Governance Services Ltd (NeSL) to replace the conventional time-intensive paper-based bank guarantee. The move is aimed to digitise trade and ease the guarantee issuance process digitally with the introduction of e-stamping and e-signing. With the new solution, the applicant will be able to instantly view a bank guarantee on the NeSL portal.
NeSL, under the aegis of the Insolvency and Bankruptcy Code, 2016 serves as a repository of legal evidence holding the information about any debt/claim, as submitted by the financial or operational creditor and verified and authenticated by the parties to the debt.
According to the release the e-guarantees will reduce the transaction cycle time from 2-3 days to a few minutes. The e-bank guarantee will also provide secure and swift options and avoid pitfalls of the paper-based guarantee process.
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Runa Baksi, Head, Head of Global Trade and Receivables Finance, HSBC India said, “Digitisation in trade finance is an ongoing focus area for us. The launch of E-BG complements and fortifies our existing spectrum of digital capabilities and offerings. We believe that E-BG will help drive transformational change and make the current process more seamless, transparent and safe.”
A Bank guarantee is a financial instrument provided by a bank or financial institution on behalf of a customer, usually a business or individual, to ensure that the customer fulfils their financial or contractual obligations to a third party.
Debajyoti Ray Chaudhuri, MD & CEO of NeSL said, “Bank Guarantees (BGs) are mostly issued the traditional, physical way which is time-consuming and comes with inherent challenges like verification of its authenticity. NeSL’s E-BG envisages online and paperless procurement of stamp duty and thus the E-BG can be issued in a couple of minutes and is made available to beneficiaries instantly in a secure, digital and paperless form. It will therefore give an impetus to automation of trade finance with the benefits accruing to business in general. It was a pleasure working with HSBC on their E-BG implementation project and I congratulate HSBC on being the first foreign bank to go live on NeSL E-BG.”