Kotak Mahindra Bank, one of India`s largest private banks, has completed an end-to-end trade finance transaction over a blockchain. The bank has wo
Kotak Mahindra Bank, one of India`s largest private banks, has completed an end-to-end trade finance transaction over a blockchain.
The bank has worked with service enterprise Deloitte to complete the trade finance test with bank JP Morgan Singapore.
Usually, trade finance transactions are conducted by the help of a letter of credit (LC). The latter takes several weeks to be obtained. This letter of credit reportedly sees bank guaranteeing a buyer`s payment to a seller on an agreed date and is a critical document in any trade finance transaction. It is especially needed in international transactions.
As Kotak Mahindra pointed out, blockchain technology can reduce the transaction time to a few hours.
“In the Indian context, banks are experimenting with blockchain applications in various areas of transactions journey and processes, including paper intensive processes of Trade Finance and Supply Chain financing segments, which are ripe for disruption.”, according to a comment by KVS Manian, president of corporate institutional and investment banking at the private lender.
In the trade finance test, the bank is using Swift that is facilitated by the Deloitte`s blockchain technology.
“We are leveraging this technology to give our clients hassle-free and profitable trades finance solution on an almost real time basis.”, added the president of corporate institutional investment and banking.
Futhermore, the bank hinted at a future banking consortium that discusses the development of blockchain solutions in areas such as KYC (Know Your Customer), cross-border payments, import/export finance, supply chain finance and others.
Earlier this year, the research arm of the Reserve Bank of India (RBI), the country`s central bank, has reportedly said that blockchain technology has “matured enough” to be the main technology used to support the digitization of India`s fiat currency, the rupee.