For the first time in India’s business history, British banking giant, HSBC Holdings Plc has completed a trade finance transaction using blockchain technology for a supply by country’s Reliance Industries Limited (RIL) to the US company, Tricon Energy.
The letter of credit (LC) transactions powered by the blockchain technology has significantly reduced the time taken for such agreements, according to a release from RIL.
The use of this technology helps to reduce the time-lines consist in the exchange of export documentation from the extant seven to ten days to less than 24 hours, according to a RIL official.
The transactions permitted a digital transfer of the title of goods from the exporter to the importer. The LC was provided by ING Bank for the buyer, Tricon Energy USA with HSBC India as the advising and negotiating bank for the Indian exporter.
According to Hitendra Dave, HSBC head of global banking and markets, the use of blockchain has a major positive impact on trade finance transactions and enables greater transparency and improved security. The technology is also more simple and compact.
At present transaction system, the purchaser and seller use paper-based LCs to underpin financial transactions and physical documents are transported to each party in the business by post, courier, and other forms of transport services which requires huge time and care for the completion of the transactions with high-level accuracy.
Businesses in India are expected to move forward with blockchain technology in the near future. Last week, with an objective to make insurance business as a business without boundaries, India’s largest insurance and comparison portal, Policybazaar.com has partnered with Accrivis Network Pvt. Ltd a data integration service provider to implement blockchain technology to raise its customer centricity through data security and application integration.
The insurtech platform is poised to adopt blockchain in its day-to-day operations to make sure that the data has not interfered and payments are shared during a particular period of time.