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Trade Finance Facilities Through Financial Intermediaries

Strategic Mandate and Objective

ETDB’s trade finance operations through financial intermediaries are directed toward two primary strategic objectives within the ECO Region:

  • Regional Integration: Enhancing and accelerating trade relations between ECO member countries.
  • Economic Resilience: Ensuring the continuous availability of trade liquidity during critical import cycles, while backing export activities to generate essential foreign exchange reserves.

To optimize market penetration, these facilities are routed through selected partner financial institutions, which on-lend the funds directly to eligible importing and exporting enterprises.

Structural Framework

  • Financing Structures: Facilities are deployed through both conventional and Islamic finance modalities.
  • Coverage: ETDB’s trade finance facilities through financial intermediaries are versatile and can be configured to cover either pre-shipment financing, post-shipment financing, or a combination of both phases within a given trade cycle.
  • Maturity Profile: Loan tenors extended to financial intermediaries are structured to match short-to-medium term trade cycles, ranging strictly between 6 months and 2 years.
  • Sub-segments: The Bank offers trade finance facilities across two complementary sub-segments to catalyse regional commercial activities:
  • Export Finance Facilities: Tailored to provide pre- and post-shipment liquidity to exporters within member countries, driving the production and cross-border sale of manufactured goods, commodities, and agricultural products across all productive sectors of the economy.
    • Import Finance Facilities: Structured to fund the procurement of foreign capital equipment (machinery and associated components), raw materials, and intermediary industrial goods to boost local productivity, accelerate industrial modernization, and ultimately cultivate greater export capacity.

Operational Workflow and Risk Allocation

  • Application Pathway: End-user company apply directly to the local partner financial institutions rather than ETDB, subject to the individual intermediary’s underwriting guidelines.
  • Delegated Risk-Related Authority: Partner financial institutions allocate funds autonomously based on their own credit risk assessments without requiring credit-risk approval from ETDB.
  • Sub-loan Credit Risk: To safeguard institutional capital while ensuring wide-reaching fund deployment, ETDB utilizes a layered risk-sharing framework with its partner financial institutions. Under this structure, the ultimate credit risk of the sub-loans—specifically the repayment risk of the individual trade finance operation—is fully borne by the participating financial intermediary. Consequently, ETDB’s direct financial exposure is limited strictly to the institutional credit risk of the financial intermediary itself.
  • Eligibility Approval: Intermediaries must secure ETDB approval regarding the mandate-related eligibility of each underlying trade transaction prior to disbursement. For detailed information on the eligibility criteria for ETDB trade finance facilities through financial intermediaries, please click here.