Hongkong and Shanghai Banking Corp. (HSBC) India and ING Belgium have announced a successful blockchain technology-enabled letter of transaction between Tricon Energy and Reliance Industries. The new system is aimed at sufficiently reducing both the costs and time of processing documentation, as the Hindu business line reports. The transaction solution has been developed through blockchain integration with the help of an electronic bill of lading platform known as Bolero. Initially introduced in 2016, the eBL Bolero system allows proper management and issuance of an electronic bill of lading and also enhances digitalization in the transfer of titles.
Singly Shared Application Platform
The end to end transaction was carried out on R3’s Corda blockchain platform which is a singly shared application, rather than going for the multiple isolated digital systems from various counterparties worldwide.
Commenting on the transaction, the head of global markets and banking in India Hitendra Dave stated:
“The use of blockchain technology in a letter of credit transaction is the first step toward digitalization in the commerce sector. It will bring positive transformation impact on trade finance, and thus enhance security and transparency, in addition to making it faster and simpler.”
He further added that the overall efficiency would increase the liquidity of businesses.
This move is a significant solution for all organizations transacting both locally and internationally. This is because it will bring different parties on one platform, making the sharing of ideas more effective.
Shrikanth Venkatachari, the joint chief financial officer of RIL, expressed his delightfulness in regards to the trade finance digitalization. He noted that HSBC is “a perfect partner who would not only help it in embracing the blockchain technology but also work with it on future projects.”
As a result of the LC successful implementation, each of the parties involved in the project would be able to verify the authenticity of the documents. The nodes will also be allowed to check if the information has been amended by any of them, to take note of the changes.
Blockchain technology reduces the transaction time guidelines that are involved in the various export documentation for the average 8 to 10 days to less than a day. If it is adopted in scale, it can optimize the working capital and also increase synergy between the involved parties. Blockchain also validates the operational and commercial viability of blockchain technology as an alternative to the traditional paper-based exchanges, the statement added.
Banks across the world are embracing blockchain enabled transactions. Currently, eight banks ING, HSBC, Bangkok Bank, CTBC Holding, BNP Paribas, Standard Chartered, SEB and NatWest in conjunction with the US-based blockchain software firm R3 are reportedly working on a transformative open source-based system. The primary aim of the initiative is to expand the network and also facilitate its adoption among financial institutions and transactions worldwide.
On September, HSBC announced that it was working on a standalone banking startup which would be used by the small business customers to fend off the competition from the app-based rivals.
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