By Staff Writer
Global banking giant HSBC has conducted what is being billed as its second live experiment for trade finance on a blockchain-based platform — this time in India for Reliance Industries Ltd., according to local media reports.
The end-to-end transaction was conducted on R3’s Corda platform.
As part of the transaction, ING Bank helped issue a digitized Letter of Credit, or LOC, for the US-based Tricon Energy Industries Ltd., which is an importer, with HSBC acting as an advisor to Reliance Industries, exporter.
Srikanth Venkatachari, joint chief financial officer, for Reliance Industries said in a statement:
“We are excited to partner with HSBC on digitalisation of trade finance. This reflects our continued commitment to embrace emerging technologies and industry first initiatives. The use of blockchain offers significant potential to reduce the timelines involved in exchange of export documentation from the extant 7 to 10 days to less than a day.”
HSBC has said that the transactions such as these validates the commercial viability of the blockchain as an alternative technology to paper-based documentation across multiple partners. The current process in which paper documents are mailed to various parties by post is time-consuming and expensive, the RIL said. The new digital-based blockchain platform could significantly help lower cost, and save time and make the procedure a lot more efficient on the whole.
Commenting on the transaction, Hitendra Dave, head-global banking and markets, HSBC India said:
“The use of blockchain is a significant step towards digitising 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. The overall efficiency it brings to trade finance ensures cost effectiveness, quicker turnaround and potentially unlocks liquidity for businesses. We’re delighted to partner with RIL and support enhanced digitisation in trade finance. We believe that the collaborative approach adopted to develop this technology has the potential to transform conventional trade finance.”
In May, 2018, HSBC and ING conducted a groundbreaking transaction for a bulk shipment of soybeans for US-based Cargill from Argentina to Malaysia, also based on R3’s Corda.