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India’s Biggest Banks Plan Consortium for Interbank Blockchain Platform

Last Updated March 4, 2021 4:53 PM
Samburaj Das
Last Updated March 4, 2021 4:53 PM

15 of India’s largest banks are coming together to form a consortium that will put to test an interbank blockchain platform in the advent toward blockchain implementation on a wider scale in the country.

According to a report in Indian business daily the Economic Times , New York-based MonetaGo, a former bitcoin exchange turned blockchain firm MonetaGo will provide the blockchain platform that will be used in the interbank consortium for pilot testing.

In quotes reported by ET, MonetaGo CEO Jesse Chenard stated:

We are going to start a pilot with about 15 of India’s largest banks to test out the platform. The banks have been working on their own blockchain pilots. But this will create a platform that everyone will build on.

Without naming the participating banks, Chenard adds that they are responsible for over 80% of all transactions in India. One bank that is confirmed to be a part of the pilot and consortium is India’s largest bank, the State Bank of India, which is a government-owned financial institution.

While details are scarce, the interbank platform will see a larger pilot wherein a blockchain platform will be integrated alongside banks’ existing infrastructure and technologies, enabling easier adoption. Chenard claims that participating in the pilot would cost a bank ‘a fraction of a million dollars’ according to the publication, further underlining the ease and seamless nature of adoption.

The bank pilot is expected to last anywhere between nine to twelve months.

“In about six months, the platform will get set up and get into production,” Chenard added. “Then, we think it could take three months or so to share the data and talk to the different governing bodies.”

India’s Central Bank Greenlights Blockchain Tech

News of an interbank blockchain consortium comes on the heels of a notably significant endorsement of blockchain technology by the research arm of the Reserve Bank of India, the country’s central bank. Having tested the innovation for core banking process, successfully, researchers also determined that blockchain technology had “matured enough” to support the digitization of India’s fiat currency.

MonetaGo’s involvement in the interbank consortium as the technology provider is preceded by its similar role in the pilot conducted by central bank’s research arm, the Institute of Development and Research in Banking Technology (IDRBT).

The IDRBT’s encouraging stance with blockchain technology, not to mention its own testing process, is certain to have fast-tracked plans for a sweeping effort within the banking industry to create an interbank blockchain platform. If it proves successful, blockchain solutions could significantly alter the financial services landscape with near-instant settlements, rapidly improved processing times with a lack of paperwork at significantly cheaper costs.

Rampant Development

While the interbank consortium looks certain to become the first-known collaborative effort among Indian banks toward developing blockchain solutions, several key private banks have already put to test the innovation, successfully.

ICICI Bank, the country’s largest private sector lender announced two successful blockchain pilot transactions – a real-time funds transfer to Dubai and an international trade finance transaction, in October 2016. Axis and Kotak Mahindra, two private Indian banks also announced their own blockchain pilot transactions during the same month. Earlier this year, Axis Bank went a step further in partnering blockchain firm Ripple to enable cross-border remittance transactions.

Making Waves

Other similar efforts from central banks elsewhere include the Monetary Authority of Singapore (MAS) announce the development of a proof-of-concept blockchain pilot to enable interbank payments on a global scale. The blockchain project is being developed in partnership with financial services blockchain startup R3.

Elsewhere, the Banque de France also revealed details of an “interbank blockchain experiment” that was conducted in late 2016.

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