In a first time for India, British banking major HSBC executed a trade finance transaction involving an export by Reliance Industries to an American client using blockchain technology
The late process of sending and receiving credit lists trough fax or email from one of the most important oil companies in India was left behind thanks to blockchain technology. Now, these procedures will be conducted more quickly and safely without physical or technological barriers.
The oil conglomerate Reliance Industries, owned by Mukesh Ambani, the richest man in India, used blockchain technology to make payments and fulfilled its first financial trading transaction.
The head of banking and global markets at HSBC India said: “The use of blockchain technology is a significant step towards the future. The efficiency it provides ensures cost effectiveness, speed, and liquidity for our business”.
A press release details that the company conducted this operation in collaboration with the American chemical technology distributor Tricon Energy, through the blockchain platform of the R3 consortium, Corda.
The banking institutions which made possible this operation were HSBC India and ING Bank Brussels. Using this blockchain platform, a credit note was issued by ING Bank for Tricon Energy USA (the importer) with HSBC India as the advisory bank for Reliance Industries(the exporter).
The Corda platform was integrated into a platform provider in the United Kingdom called Bolero International and was used to issue and manage an electronic freight law. The objective is to issue and manage an electronic bill of lading that allows the digital transfer of the seller’s belongings to the buyer in the underlying transaction.
By using blockchain technology, the company seeks to digitize financial transaction processes to save budget and, of course, time. “The use of blockchain technology offers us a significant potential to reduce times involved in the exchange of export documentation. The process that happened in seven or ten days now is ready in less than one day”, said Srikanth Venkatachari, CFO at Reliance Industries.
This solution will benefit any organization involved in the purchase and sale of products internationally since it brings together all participants on the same platform. Blockchain allows users to work with a distributed database that maintains a list in the continuous growth of records that are conducted in an orderly manner.
Blockchain technology also offers the benefit of being transparent, because all the people involved can see the progress that is made in real time.
A large number of national lenders, including ICICI Bank, inter alia, are implementing blockchain technology to conduct their transactions. Many companies consider commercial financing as one of the best cases of use of this type of technology, which has managed to reduce the time of execution of the formalities.
Representatives of HSBC reported that along with five other banks that support the “Corda application”, they are working on expanding the network into an open source database to boost the adoption of this payment mechanism on the industry.
By María Rodríguez