Trade Finance refers to financial products and services used to facilitate international and domestic trade, ensuring smooth payment and risk management between buyers and sellers.
Trade Finance helps bridge the gap between exporters and importers by reducing risks related to payment, delivery, and credit.
Banks and financial institutions act as intermediaries to ensure that exporters get paid and importers receive goods as agreed.
In India, trade finance activities are regulated by the Reserve Bank of India.
"An exporter ships goods to another country and receives payment through a Letter of Credit issued by a bank—this is trade finance."