The Study On The Risk Control Of Supply Chain Finance Of Bank Of China Hunan Branch

Supply Chain Finance, a combination of the modern logistics industry and financial industry, evolved from the innovation of them. Both industry promote each other, and develop together. Healthy development of Supply Chain Finance will lead to a "win-win" for banks, third-party logistics providers, manufacturers and dealers. However, domestic commercial banks do not have a deep understanding to the risks of Supply Chain Finance. They merely see enormous financial gains from supply chain industry, but neglect the potential risk. Therefore, it has been a crucial issue to control the Supply Chain Finance risks effectively in light with the problems occurring in the practice of supply chain finance of Bank of China Hunan Branch.Firstly, this paper introduces the features of supply chain finance which are different from traditional ones. Author defines that Supply Chain Finance is a systematic financing arrangement facing to all members in supply chain, and reached by core enterprise and bank. Such arrangements include three main models in practice: accounts receivable financing, inventory financing and account prepaid financing. This paper analyses the financing structure and formation mechanism of risk of these three models in detail. And then, the paper analyses the risk management of the Supply Chain Finance of Bank of China Hunan Branch. Although Bank of China Hunan Branch takes a series of measures to control risk which is possibly from Supply Chain Finance, some problems has been still exposed in the risk management of Supply Chain Finance. These problems mainly origin from insufficient risk awareness of Supply Chain Finance, flaws in operational risk management and management of line of credit and so on. Then, this article focuses on the difference between Supply Chain Finance credit line and traditional credit line. And a model of credit line is set up to strengthen the risk control of Supply Chain Finance. Finally, this paper points out three specific measures to improve risk control of Supply Chain Finance of Bank of China Hunan Branch.