RBI Collaborates with Top Banks for Blockchain-Based Trade Finance Pilot

The Reserve Bank of India (RBI) is enlisting several major banking institutions in the country to conduct a blockchain-based pilot project centered on trade finance. The goal of the project is to make blockchain a part of India’s central banking system.

According to a report by the Economic Times (ET), the project is being spearheaded by the central bank’s innovation center in Bangalore, with technology support from US-based companies including IBM and Corba Technologies, as well as Belgian company SettleMint.

The main banks currently involved in the pilot project are HDFC Bank, ICICI Bank and State Bank of India (SBI). Axis Bank, Bank of Baroda and Union Bank of India are also involved.

According to people familiar with the development, if successful, the “proof of concept” project will bring more transparency and reduce fraud in bank lending transactions. It will do this by using blockchain technology to maintain tamper-proof Letters of Credit (LC) records.

“It’s about evaluating how blockchain can facilitate and secure our banking system,” said one of the people above, another adding, “The pilot project started with banks to run blockchain-based systems. the blockchain to issue digital LCs.”

The RBI Innovation Hub reportedly held a workshop with staff from participating banks to give them hands-on experience with distributed ledger technology (DLT).

It is noted that the project is entirely separate from the Central Bank of India’s (CBDC) digital currency plans, although a similar approach is also being taken. It is also probably a response to an LC scandal that happened last year at the Punjab National Bank.

Adoption of Blockchain Technology in India is Growing

Although opposed to the popularity of digital assets, India has shown that it is open to the underlying blockchain technology. India is keen to launch its blockchain-backed CBDC as soon as possible.

Recently, RBI Deputy Governor T. Rabi Sankar said that the bank revealed that CBDC deployment is among its priority projects for the 2022-2023 financial year.

Meanwhile, India is also collaborating with key international and local players on other blockchain-focused projects. He is working on a soon-to-be-released digital currency consultation paper with the World Bank and IMF.

India has also signed a bilateral trade agreement with the United Arab Emirates which will see the two countries collaborate on emerging technologies including blockchain.

Watch: BSV Global Blockchain Convention panel, Blockchain for Government Data & Applications

New to Bitcoin? Discover CoinGeek bitcoin for beginners section, the ultimate resource guide to learn more about Bitcoin – as originally envisioned by Satoshi Nakamoto – and blockchain.

Comments are closed.