The use of blockchain technology in India’s mainstream financial sector is slowly gaining traction. A subsidiary of HSBC has teamed up with Reliance Industries (RIL) to complete a blockchain-enabled trade in the country.
Blockchain Trade Transaction
The letter of credit transaction powered by blockchain was the first of its kind in the country. With the help of the ledger technology, the two were able to export RIL assets to a U.S. client, Tron Energy. Consequently, the parties experienced a reduction in cost and processing time for export documentation.
Correspondingly, the transaction solution came through the integration of blockchain with an electronic bill of lading. Besides that, Bolero is the new system that allows the issuance and management of electronic bills of lading. Likewise, it also enables digital transfer of goods and titles between buyers and sellers.
The transaction is a major development in the export market as it underscores the use of blockchain in global trade. Therefore, the new system also presents a platform where different parties can come together for efficient interactions and facilitated transactions.
HSBC is not new to the use of blockchain technology to process transactions. Early in the year, it completed the first ever blockchain trade. The transaction involved the processing of a shipment of soya beans from Argentina to Malaysia. The success of the transaction showed the potential of blockchain in enabling the global trade finance market.
The end-to-end transaction took place on R3’s Corda blockchain platform. According to the Head of Global Banking and Markets at HSBC India, the use of blockchain technology is a big step in trade digitization. Similarly, he expects the technology to enable greater transparency as well as enhanced security in the sector.
“This transaction validates the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation,” HSBC India relayed in a statement.
The Reliance Industries CFO, on the other hand, expects the use of blockchain technology to reduce the time involved in export documentation significantly. Currently, it takes between seven to ten days to process such documentation.
A consortium of major banks led by HSBC, BNP Paribas, and Standard Chartered is currently exploring the use of blockchain. The consortium has since launched a blockchain platform that is to play a role in financing international trade.
eTrade is the name of the platform that seeks to reduce the time needed to approve loan applications between partners. The current plan is to reduce the application time from 36 hours to just four hours.
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