Allahabad Bank, one of India's largest banks with around 2,000 branches, has opted to outsource its letter of credit (L/C) processing to Standard Chartered Bank.

Under this agreement, the Indian bank's L/Cs will be processed in Hong Kong and other Asian countries.

Outsourcing trend

The agreement appears to confirm the trend for some of the more commonly used trade services to be undertaken by just a handful of major players.

Standard Chartered says that through its enhanced trade services solution, client financial institutions can offer a range of innovative and competitively priced trade services to customers, while avoiding the high capital investment required to deliver them.

Standard deals

The bank also claims that its L/C document checking will save client financial institutions time and operational expense.

Standard Chartered has struck trade services dealswith several financial institutions, includingWestpac Institutional Bank, SunTrust Bank, Jordan National Bank, Bank for Foreign Trade of Vietnam, Banco de Credito del Peru and Commercial Bank of Ceylon.

Gathering pace

The trend towards outsourcing trade services has been gathering pace over recent years, even with major banks such as Barclays outsourcing L/C processing and other trade services.

Barclays opted to outsource to ABN Amro, which has at least 35 outsourcing agreements in place (DC World News, 14 May 2004).

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.