Two more Indonesian banks have signed up to the Asian Development Bank's (ADB) Trade Finance Facilitation Programme (TFFP).

Bank Mandiri and Bank Muamalat are the latest participants in the programme, which provides guarantees for letters of credit (L/Cs).

Guaranteed transactions

Under the TFFP, international banks that may not have worked with banks in developing countries feel comfortable doing so because transactions are guaranteed by ADB.

ADB is reportedly talking to ten other Indonesian banks about their possible participation in the programme.

L/C market

Signing up to TFFP may be particularly useful for Bank Mandiri's L/C business.

It already provides around 17-20 per cent of L/Cs provided by Indonesian banks for transactions in Asia.

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