Collateral Management International Trade Facilitation Transactions in Supply chain

The collateral management international trade facilitation is the method of granting, verifying and managing collateral transactions in order to reduce risk in unsecured financial transactions in global supply chain.

The collateral management international trade facilitation is an essential and integral part of any financial institution's risk and regulatory compliance framework. Collateral it is used to provide security against the possibility of payment default by the opposing party in a transaction.

Cleint would like to avail the Collateral Management (CMA) & other supply chain management services for many countries for Industrial Raw Material, Agro products and commodities.

Types of collateral:

There is a wide range of possible collaterals used to hedge credit exposure with various degrees of risk:

• Cash Collateral like Fixed Deposit, Stocks, etc.

• Real estate: Property, Land

• Other: metals, commodities, etc.

SUPPORT SERVICES

AIM Control (AIM Group®)  Commodity Inspection Services provides trade facilitation support services in selective regions where AIM Control (AIM Group®)  have their own offices. Such trade facilitation support services includes Collateral Management Agreement (CMA) services and Stock Monitoring Agreement (SMA) services.

Collateral Management Agreement (CMA) services

CMA services are formed between a financier (bank) if goods are pledged to bank and finance transactions are involved between Bank and owner of goods whose goods are pledged to bank, a depositor/borrower (owner of the goods pledged to bank), the collateral manager (inspection company) and the warehouse provider (storage provider for Third party storage). Collateral Management Agreement (CMA) is signed between parties as referred to above either tripartite or quadripartite. CMA services facilitate the import and export of trade of agricultural and other commodities.

Under CMI, the physical commodity is received into a storage facility such as warehouse or silo and retained under exclusive custody until the collateral manager is instructed by the bank or the borrower to release (partially/totally) the commodity.

Agriculture provide highly specialized CMI and Warrants services in Vietnam and Asia, Global.

Core business services range from full auditing of farm produce including pre-project credit ratings with financial institutions and also working closely with producers to provide crop monitoring, classification, weigh-bridge control, warehouse storage and produce insurance. AIM Control (AIM Group®)  Global follows strict legal and financial procedures and it is important that operations staff consist of fully qualified all trained and experienced in aspects of the agriculture supply chain.

Main CMA services:

• Preliminary inspection of the storage facility assuring suitability for storage of goods

• Supervision of stacking/storing of goods into a warehouse or silo

• Issuance of warehouse or silo receipts

• Daily verification of the commodity condition and quantity stored

• Supervision of inbound/outbound movement of the commodity upon receipt of appropriate written instructions

• Recording and reporting of in/out movement of the commodity

Stock Monitoring Agreement (SMA) services

AIM Control (AIM Group®)  Commodity Inspection Services also provides stock monitoring services for verification of quality and quantity of commodities stored in warehouses and silos. The Stock Monitoring Agreement is signed between the parties involved in the stock monitoring. The commodities under SMA are generally not held under exclusive custody. The documents related to commodities storage/movement are verified and validated by the SMA provider (inspection company). The in/out movement of commodities supervised. All recordings are maintained and reported on daily/periodic basis.

CMI AND WARRANTS SERVICES

Crop monitoring - Full technical consultation and advice for farmers and producers including seed choice, planting, fertilisation, crop monitoring, harvest, quality control, classification, storage and transportation logistics from warehouse to ship side, GAFTA or FOSFA approved loading and discharge supervIsion and inspection for end buyers.

Stock monitoring – CMI quantity will be logged into a stock book, daily release quantity will be verified against the release note and the stock book. Reports and updates will be sent by email to the relevant parties on the next working day or daily.

Warehouse security – padlocks installed on every door of the warehouse that will be attended by minimum of 1 inspector 24 hours/day. Only authorized personnel shall enter the warehouse.

Goods release – will be upon official written instruction from AIM Control (AIM Group®)  Global and with written approval of receiver/creditor through an official release order. We will also monitor release and ensure safe passage of goods from CMI cargo to Non CMI Cargo by: - a) bagging cargo b) bulk delivery over weighbridge.

At load port – Upon the official signing of legal collateral management agreements between the creditor and depositor and any appointment of AIM Control (AIM Group®)  Global inspector to certify loading supervision and cargo quantity and quality, the cargo is under due care of creditor and depositor.

At discharge – AIM Control (AIM Group®)  Global will carry out the inspection to determine the Bill of Lading and the quantity at load port. All weighed goods would be stored at the approved warehouse facility under close custody of ASA.

CMI pledge – upon completion of discharge operations,  AIM Control (AIM Group®) Global would pledge the CMI quantity based on actual weight figures and would take full effect by the issue a non-negotiable warehouse receipt endorsed by an authorized signatory in favour of the receiver.

For further information of client’s requirement as one exaple:

the following service requirements on regular basis in the following ports/countries (example: Sri Lanka, Bangladesh, Madagascar, India and another country)-

Inspection- cum- Third Party Custodian Services (quantity in range of X.xxx  MT to 10,000 MT per lot):

The inspection is done for the goods by  AIM Control (AIM Group®) Global companies and coordinators.

After verification of material as per quality & quantity. The commodity will be mainly agricultural goods like rice, sugar, wheat, edible oil, etc., calling commodities.

Client orders avail the Collateral Management (CMI) & other supply chain management services for following countries for Industrial Raw Material, Agro products and commodities.

NOTED

Regarding to Transactions and International payment.

AIM Control (AIM Group®)  will not take in any situation

1. AIM Control (AIM Group®) company who does not receive Transactions and/or International payment from client or their banking regarding to their CMI and Requirement.

2. AIM Control (AIM Group®) who does not release any money to the Seller and any parties

3. AIM Control (AIM Group®) who have the right to associate with other personnel / companies to serve customers in a multinational form

SCOPE OF WORK

• Site Inspection

• Know Your Client’s Customer and all stakeholders (including transporter, storer and processor) for each transaction

• Deal specific Commodity Profile

• Warehouse Inspection

Each service is broken into three steps:

• Pre Deal and Deal Approval process

• Design sequence of events

• Identify risks and mitigates from Bank point of view

• Execution

• Maker /Checker concept with approvals by CSM

• Administration and Reporting

• Independent issuance of WHR and RO

• Independent reporting and tracking

• Loan justification

• Mandatory Credit Support approval

Enhanced Collateral Commodity Credit Control Capacity

Spans the entire value chain beginning with the post harvest stage and encompasses the processing and movement of commodities with lenders. It gives lenders comfort through:

• Real time access to the location

• Weight, quality and quantity of commodities

• Single point of interface between the lender, the borrower and the value chain

• Enabling the lender to monitor asset based and asset conversion lending through market to market evaluation.

The Core Functions:

• Guarantees / Certifies the Collateral

• Facilitates end-to-end (Value Chain) Trade Finance

• Facilitates Collateral Transfer

• Risk Assessment

• Escrow Agent Facilities

• Facilitates Settlement on Exchanges - guarantees delivery  system

• Issues of Electronic Warehouse Receipts

• Mitigates Performance Risk

• Supports bodies’ revenue collection

Important Definitions:

• “Bailment”
• “Collateralized loans”
• "Pledge”
• “Lien" — The right to retain possession of a property until all charges against it are paid.

Types of Liens:

• “Possessory Lien”
• “Bank - Pledge's lien”
• “Warehouseman’s lien/ Collateral Controller’s lien”

“Full Outturn Guarantee / FOG"- The insurance coverage extended to differences and shortages in quantities of any Goods under specific terms and conditions.

“Full Outturn Quality / FOQ"- The insurance coverage extended to defects and differences in quality parameters and/or specifications in any Goods under specific terms and conditions.

"Misappropriation“ shall be mean unauthorized, fraudulent or dishonest appropriation or use, or unexpected or unforeseen or unexplained loss of the Goods under collateral management / Field Warehousing and /or monitoring and/or storage supervision.

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