HSBC Conducts First Blockchain Deal With Letter Of Credit In India
The Indian branch of HSBC and the Dutch ING Bank made the first blockchain deal with a letter of credit in India, The Hindu Business Line reports. The client companies of the banks utilized the technology to deliver export goods.
In traditional banking, physical copies of letters of credit for each transaction are delivered by mail or courier. ING issued a letter of credit to the American petrochemical company Tricon Energy, while HSBC was the advising bank of the largest Indian holding Reliance Industries (RIL).
The parties used the Corda blockchain platform, developed by R3, to transfer the documents. As HSBC noted, blockchain has proven its commercial efficiency and can serve as an alternative to common systems for sharing paper documents.
The bank added that the long time of processing documents and high costs often create obstacles for exporters and delay the speed of trading.
According to Srikanth Venkatachari, the RIL's financial director, blockchain adoption can reduce the time spent on processing the documentation from the current seven to ten days to less than one day. He called the blockchain solution a step forward for any organization engaged in international trade since this technology can gather all transaction participants on a single platform.
Other large banks, including BNP Paribas and Standard Chartered, supported the initiative of the Indian enterprises and are also looking to join the Corda platform.
In July 2018, the Russian Alfa-Bank tested the Corda blockchain. According to its representatives, the technology allows managing clients' personal information following the know-your-customer procedure.
Previously, Samsung announced the blockchain adoption for shipment between Asia and Europe.