Privately owned YES Bank of India has signed an agreement to participate in the International Finance Corporation's (IFC's) Global Trade Finance Programme (GTFP).

Under the agreement, the IFC will extend credit guarantees to YES Bank to cover its payment risks under trade instruments issued by the bank in favour of participating correspondent banks.

Network expansion

Participation in the letter of credit (L/C)-oriented GTFP will also provide YES Bank with wider access to a global network that should enable it to facilitate transactions in challenging markets.

According to a YES Bank statement, it should also help the bank provide more competitive financing and build correspondent bank relationships with new institutions.

GTFP history

Launched in September 2005, the GTFP offers correspondent banks partial or full guarantees covering payment risks on participating banks for trade related transactions.

These guarantees cover a variety of underlying trade instruments, including L/Cs and bank guarantees, as well as trade-related promissory notes, accepted drafts, bills of exchange, bid and performance bonds and advance payment guarantees.

Trade promotion

The programme seeks to promote trade flows between emerging markets and increase developing countries' share of global trade.

Under the GTFP, IFC has so far provided US$23 billion in credit guarantees for more than 26,000 trade transactions bringing together over 500 banks in 150 countries.

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