HSBC Holdings Plc carried out a trade finance transaction in a first for India using blockchain for an export by Reliance Industries Ltd (RIL) to Tricon Energy based in the US. The letter of credit (LC) transaction allowed by the blockchain significantly reduced the time taken for these transactions, RIL said in a press release. “The use of blockchain offers significant potential to reduce the timelines involved in exchanging export documentation from the existing 7-10 days to less than one day,” said Srikanth Venkatachari, joint chief financial officer at RIL.
Reliance receives first LC payment from India via blockchain
The transaction allowed a digital transfer of the seller’s title of goods to the buyer. ING Bank for Tricon Energy USA (importer) issued the letter of credit with HSBC India as the RIL advising and negotiating bank.
HSBC ‘s Head of Global Banking and Markets, Hitendra Dave, said the use of blockchain has a huge effect on trade finance transactions and, in addition to making it easier and quicker, allows for greater transparency and improved protection.
Vedanta, YES Bank, MonetaGo use blockchain to digitally issue CP in Asia
Explaining the current system, Reliance said buyers and sellers are currently using paper-based credit letters to back up transactions and physical documents are sent to each party in the transaction by email, courier or fax. Although the current system offers a high degree of certainty, the time and costs involved in processing the documents are deterrent to exporters.