Despite a plethora of sometimes unclear regulations and restrictions, large businesses and banks in India are still embracing cryptocurrency — or at least some of the technology that underpins it — as a more reliable way to reconcile accounts, make payments, keep proper records, and manage internal funds. According to a report in the India Times, a number of Indian corporations are currently trialing blockchain technology as a means of record keeping.
Despite the traditionally hostile stance of the Reserve Bank of India on cryptocurrency exchange activities and its recent announcement that it will not be launching the mooted “Digital Rupee,” cryptocurrencies still appear to have a future in India. In the light of revelations that a lack of proper record keeping contributed to the IL&FS takeover, more large businesses are apparently willing to explore alternatives which will ensure that all financial records and contracts are properly documented.
Using blockchain technology for record-keeping practically removes the possibility of discrepancies, and it is this security functionality that makes it especially useful for large corporations with multi-level data flow. While still in it’s testing stage, sources quoted by the India Times say that the results look promising. According to them, if final results are impressive, the corporations involved have plans to scale up the whole process to cover wider areas.
Some of the big names reportedly making such moves include Hindustan Unilever, ABG Shipyard, HDFC Bank, and Reliance Industries. Right now, several pilot tests are running which use DLT strictly as a record keeping tool with hopes of balancing the books either at the end of the quarter or at the year’s end. Although there is no publicized timeline yet for the testing and proposed scale-up, stakeholders expect that blockchain technology will have a big future in the Indian corporate space.
Speaking to the India Times, Sai Venkateshwaran, a Partner and Head of CFO Advisory at KPMG India, said:
Apart from greater efficiency and accuracy, [blockchain technology] has the potential to bring enhanced levels of transparency for group treasury management and also cost savings.
Significant restrictions by the Reserve Bank of India (RBI) may yet prove to be a challenge for such nascent implementations, but many experts are of the opinion that these restrictions can be circumvented if corporations keep transactions strictly in house. In addition to high levels of cryptocurrency fraud taking place in India, regulatory concern also falls on the space because of perceived problems with taxation and accounting compliance.
Despite this, according to the report, corporate stakeholders remain convinced that getting regulators on their side in an economy projected to surpass the US by 2030 is only a matter of time.
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Last modified: March 4, 2021 2:51 PM