In a first of its kind, HSBC India and ING Bank Brussels have executed a blockchain enabled, live trade finance transaction with Reliance Industries and Tricon Energy.
The blockchain enabled Letter of Credit (LC) transaction facilitated the shipment between Reliance Industries and Tricon Energy, USA. ING Bank issued the LC for Tricon Energy and HSBC India was the advising and negotiating bank for Reliance Industries. The end-to-end transaction was executed on R3’s Corda blockchain platform.
At present, physical copies of LCs are sent to each party in the transaction by post, courier or fax. “This transaction validates the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation,” HSBC India said, adding that time and cost involved in processing paper documents are often are deterrents for exporters and delays the pace of trade.
Hitendra Dave, Head-Global Banking and Markets, HSBC India said, “The use of blockchain is a significant step towards digitising trade and enables greater transparency and enhanced security in addition to making it simpler and faster.”
Srikanth Venkatachari, Joint Chief Financial Officer, Reliance Industries said the use of blockchain offers significant potential to reduce the time involved in exchange of export documentation from the current seven to 10 days to less than a day.
“This solution is a significant improvement for any organisation involved in buying and selling goods internationally, as it truly brings together all parties onto one platform,” HSBC India further said.
R3, HSBC, ING and six other banks including Bangkok Bank, BNP Paribas, CTBC Holding, NatWest, SEB and Standard Chartered support the Corda application and plan to expand the network on an open source basis to drive adoption across the industry.