Tuesday, 01 October 2019 02:34

HSBC gets regulatory green light for first receivables finance deal in Bangladesh

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People in Bangladesh People in Bangladesh

HSBC has carried out the first receivables finance transaction in Bangladesh, after the country’s regulator approved the use of the instrument.

In a circular published on June 30, Bangladesh Bank says it will now allow “export under open account credit terms against payment undertaking or payment risk coverage with the option of early payment arrangement on a non-recourse basis”, with the margin on early payment set at no higher than the six-month US dollar Libor plus 3.5% annually.

The HSBC programme will allow ready-made garment exporter M&J Group, which supplies clothing retailers including H&M, Gap and Zara, to receive payment upon invoice acceptance, down from 90 days previously, under the buyer’s default risk coverage from HSBC. The name of the buyer has not been disclosed.

“We are extremely pleased to partner with HSBC on this first transaction under the proposition which will help us to get the benefit at both ends by catering to buyers’ increased credit terms but with early payment on a non-recourse basis,” says Salahuddin Ahmed, managing director of M&J Group.

The garment industry has been hard hit by the Covid-19 crisis. According to a recent report by consulting firm McKinsey, revenues for the sector will drop by as much as 30% in 2020 due to dramatic falls in sales. Bangladesh, the world’s second-largest garment exporter, has been particularly impacted.

Read 622 times Last modified on Monday, 13 July 2020 08:20
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