Letter of credit (L/C) business is picking up as the availability of trade finance has almost returned to normal according to a senior banker in India.

Kuresh Sarjan, Senior Vice President and head of global trade supply chain solutions in Asia for Bank of America Merrill Lynch, told Indian media that levels of business are now comparable with levels recorded before the collapse of Lehman Brothers.

Pricing

Sarjan reckons the price at which trade finance is available to Indian companies in overseas markets has fallen sharply from the levels reached in the depths of the economic downturn.

The banker also sees changes to the way companies look to banks for support in financing their global trade needs.

L/C demand

He says there are concerns regarding counter-party risk exposure for both companies and banks in Asia, especially for large transactions.

Sarjan reckons this is driving companies towards a greater reliance on L/Cs, for both exports and imports.

Improvements

But business is definitely picking up in some areas, Sarjan told India's Financial Chronicle.

"Recently, we have done major deals for a large commodity player and provided large credit facilities to finance its raw material imports against L/Cs issued by Indian banks," he said in a interview with the paper.

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