Reliance Industries Limited (RIL) has successfully pioneered the Blockchain payment method in India. HSBC India and ING Bank Brussels have successfully executed a trade finance transaction involving an export by Reliance Industries to an American client Tricon Energy using the blockchain. HSBC announced the success of the blockchain-enabled, live trade finance transaction as it has cut down the time taken for such transaction from 7-10 days to now less than a day.
This end-to-end transaction was executed on a single shared application, Corda blockchain platform which wiped out the need of multiple digital systems spread across the globe among various counterparties.
ING Bank has issued the Letter of Credit for Tricon Energy USA, with HSBC as the advising and negotiating bank for Reliance Industries.
The blockchain-enabled Letter of Credit transaction facilitated a shipment between Reliance and the US-based Tricon Energy, a joint statement issued by HSBC India and Reliance said. However, it is an integration between an electronic bill of lading provider and a blockchain-based platform, that has enabled the transfer of title.
RIL joint chief financial officer Srikanth Venkatachari quoted, “We are excited to partner with HSBC on digitalisation of trade finance. This reflects our continued commitment to embrace the emerging technologies and industry-first initiatives. The use of blockchain offers significant potential to reduce the timelines involved in the exchange of export documentation from the extent 7 to 10 days to less than a day.”
With this statement, he has certainly claimed that this is a significant improvement for any organisation who is involved in the international exchange of goods, as it brings together all parties onto one platform.
Hitendra Dave, Head-Global Banking & Markets, HSBC India commented, “The use of blockchain is a significant step towards digitalizing trade. It has a transformative impact on trade finance transactions and enables greater transparency and enhanced security in addition to making it simpler and faster.”
Reliance shared its opinion at current scenario saying, buyers and sellers use paper-based LCs to underpin transactions. Physical documents are sent to each party in the transaction by post, courier or fax. While these paper documents provide certainty, but the time and cost involved in processing them are deterrents for exporters and impairs the pace of trade.
HSBC has commenced that it is seeking to expand the network on an open source basis to drive adoption across the industry, along with five other banks globally supporting the ‘Corda application’.