1. Structured Finance through Collateral Management P V Ananthakrishnan Executive Vice President & Head, Commodity Business

2. Structured Finance  An art of transferring the risks from parties less able to bear them to those more equipped to bear them.  Move the risk away from the party which is being financed  Conversion of Wealth to Capital Plantations, Oil etc

3. Why Structured Finance  Traditional Bank Finance Primary Risk on Borrower Financials of borrower – Key element Other Collateral – Secondary  Borrower can’t optimize their working capital requirements  High interest due to higher risk  Financing to new Companies

4. Structured Commodity Finance  Primary risk on underlying commodity  Storage/Control of commodity With neutral party  Borrower Profile/Financials Secondary comfort

5. Structured Commodity Finance Facilitators…  Warehousing Infrastructure  Logistics Management  Quality Assaying  Insurance  Exit Options

6. Collateral Management  Essential component of effective credit risk management  One of the method of securing the loan with physical commodity  Process comprises of Bank, Borrower & Collateral Manager  Collateral Manager must enjoy fiduciary trust of Borrower & Bank

7. Warehouse Receipt Finance Collateral Manager Warehouse BankBorrower Disbursement of loan Control Commodity Quality Testing Quantity Checking Logistics Acceptance for storage Issue of receipt Regular monitoring Procurement Acceptability Of Warehouse Lien marking Tripartite agreement

8. Service Provider Warehouse Service Provider Farmer Commodity Collateral Manager Bank Mobilizes Business Logistics Mgnt Quality Check Control & Monitor Warehouse Receipt With lien marking Disbursement thru SP Deposit of Commodities

9. Import Trade Collateral Manager Overseas Supplier Indian Buyer Bank Purchase Contract Tripartite Agreement LC facility Commodity As per LC Terms Warehouse Shipment Pledge To Bank Repayment Pledge Release Monitoring & supervision Clearance & logistics

10. Export Trade Collateral Manager Overseas Buyer Indian Supplier Bank Sale Contract Tripartite Agreement LC facility Commodity As per LC Terms Warehouse Pledge Of commodity Repayment through LC payments Shipment Release of pledge Logistics

11. Collateral Management “Collateral Management enables the lenders to set up operational risk parameters while lending and also to control and monitor these parameters”

12. Our Experience  Structured Financing Bulk Financing Service Provider  About 50 Commodities  Over 500 locations

13. Challenges  Financial Soundness of Collateral Manager  Integrated Solutions  Quality Storage Capacity  Comprehensive Insurance Cover  Uniform laws covering multiple acts / licensing requirements  Vibrant Futures Market

14. Thanks