Deep-tier supply chain finance (DTSCF) not only unlocks finance at favorable rates for deeper tiers in a supply chain, but it promotes an ecosystem of financial stability, risk management, and sustainability throughout the entire supply chain. DTSCF has the potential to reshape and strengthen traditional relationships by fostering more resilient; transparent; and environmental, social, and governance (ESG)-aligned trade relationships.
In this guidance note, the Asian Development Bank (ADB) and BAFT (Bankers Association for Finance and Trade) offer perspectives on DTSCF, outlining its features as a new technique in financing trade and supply chains. The note also distinguishes what DTSCF is and does not aim to be while focusing on the necessary definitions and legal frameworks to enable its success at scale. The note highlights the potential of DTSCF to bridge the trade finance gap, drive liquidity to the most underserved segments of the trade market, and enhance visibility within global supply chains.
Source: BAFT, Asian Development Bank