The Reserve Bank of India (RBI) has launched a blockchain-based trade financing pilot project in collaboration with top lenders including HDFC bank, ICICI Bank and State Bank of India, among several others, Economic Times reported, citing unidentified sources.
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Fast facts
- Belgium-based SettleMint, U.S.-based Corda Technologies and IBM are reportedly providing technology support for the project driven by the central bank’s Innovation Hub in Bangalore, the report said.
- The central bank’s project hopes to integrate blockchain technology into the core banking system to prevent letters of credit fraud.
- Letters of credits serve as financial contracts between a bank and a beneficiary that guarantees transactions are made when agreed conditions are met.
- The pilot project, called “proof of concept” in industry parlance, has begun with banks to run blockchain-backed systems to issue digital letters of credit, the report said.
- Blockchain’s immutability could be used to mitigate tampering of documents recorded on the digital ledger.
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