HSBC completes first of its kind blockchain trade finance transaction in India
On Sunday, major British Bank HSBC announced it had completed a blockchain-enabled trade finance transaction with Reliance Industries — the first such transaction completed in India.
The announcement explains that the transaction was implemented jointly with ING Bank Brussels, Indian oil and gas conglomerate Reliance Industries, and US-based chemical products distributor Tricon Energy. Notably, Reliance Industries is owned by the richest Indian citizen, business magnate Mukesh Ambani.
As part of the transaction, a blockchain-enabled letter of credit transaction facilitated a shipment between Reliance Industries and Tricon Energy. The transaction massively reduced the time taken for processing the documents.
The end-to-end transaction was executed on the Corda blockchain platform, developed by the R3 consortium. Corda integrated with the electronic Bill of Lading platform of the UK-based trade finance digitization company Bolero. The aim was to allow a digital transfer of the title of goods from the seller to the buyer in the underlying trade.
According to HSBC India, the solution is a significant improvement for any organization involved in buying and selling goods internationally, based on the fact that it unites all parties on one platform.
“R3, HSBC, ING, the other six banks supporting the Corda application (Bangkok Bank, BNP Paribas, CTBC Holding, NatWest, SEB and Standard Chartered) are seeking to expand the network on an open source basis to drive adoption across the industry. This includes technology partners that can provide banks and customers tool kits for easier onboarding, ecosystem participants, besides buyers/sellers and their banks,” the announcement reads.
HSBC India’s Head of Global Banking & Markets Hitendra Dave noted that the use of blockchain is a significant step towards digitizing trade.
“It has a transformative impact on trade finance transactions and enables greater transparency and enhanced security in addition to making it simpler and faster. The overall efficiency it brings to trade finance ensures cost effectiveness, quicker turnaround and potentially unlocks liquidity for businesses. We’re delighted to partner with Reliance Industries and support enhanced digitization in trade finance. We believe that the collaborative approach adopted to develop this technology has the potential to transform conventional trade finance.”
Srikanth Venkatachari, Joint Chief Financial Officer of Reliance Industries added that they are excited to partner with HSBC on digitalization of trade finance.
“The use of blockchain offers significant potential to reduce the timelines involved in exchange of export documentation from the extant 7 to 10 days to less than a day. When adopted at scale, it helps in significant optimisation of working capital. Further, use of blockchain in trade finance enhances transparency, security and synergy across all the parties and stakeholders involved.”