Reliance Industries has effected a trade finance transaction involving export to an American client using the blockchain, which massively reduced the time taken for processing the documents.
British banking group HSBC, together with Belgian banking major ING, executed the trade finance transaction for Reliance Industries and the US importer.
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.
“The use of blockchain offers significant potential to reduce the timelines involved in exchange of export documentation from the extant seven-ten days to less than a day,” the statement quoted RIL joint chief financial officer Srikanth Venkatachari as saying. The blockchain platform was integrated with the electronic bill of lading (eBL) platform to issue and manage an electronic bill of lading, it said, adding this allows a digital transfer of the title of goods from the seller to the buyer in the underlying trade.
The solution is a significant improvement for an organisation involved in buying and selling goods internationally, as it brings together all parties onto one platform. Blckchain solutions is a distributed database that maintains a continuously-growing list of ordered records called blocks and is deemed to be very transparent as all the stakeholders can view progress real time.
A slew of domestic lenders, including ICICI Bank, SBI and Yes Bank among others are working on blockchain solutions and count trade finance as one of the best use cases for the technology because of the ability to cut down on time.
HSBC’s head of global banking and markets Hitendra Dave said blockchain has a transformative impact on trade finance transactions and enables greater transparency and enhanced security in addition to making it simpler and faster. It may also ensure cost effectiveness, quicker turnaround and also potentially unlock liquidity for businesses, he added
For this transaction between Reliance and Tricon, the LC was issued by ING Bank, Brussels for Tricon Energy US with HSBC India as the advising and negotiating bank for Reliance, it said, claiming the transaction validates the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation.