Reliance Industries, India’s largest private sector firm, has successfully participated in its first ever trade finance transaction powered by blockchain technology.
In an industry first, Indian oil and energy conglomerate Reliance Industries completed a trade finance transaction with US-based Tricon Energy, a global chemical distributor.
The end-to-end ‘live’ transaction was executed over R3’s Corda blockchain, a press release from HSBC India confirmed. Corda’s blockchain platform is described by the press release as a “single shared application, rather than requiring multiple isolated digital systems across various counterparties, located around the globe.”
HSBC and fellow banking giant ING Bank Brussels facilitated the Letter of Credit – the bank guarantee of a buyer’s payment- of the shipment between the two energy firms in a fully digitized transfer of title. Compared to current timelines of up to 7 to 10 days of processing export documentation, the blockchain solution facilitates the transaction in less than a day.
Pointedly, the announcement boasted:
This transaction validates the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation.
Specifically, the letter of credit was issued by ING Bank for Tricon Energy USA as the importer with HSBC India participating as the negotiating bank for Reliance Industries as the exporter.
Underlining the “transformative impact” of blockchain technology in trade finance, HSBC India’s head of global banking and markets Hitendra Dave stated:
“The use of blockchain is a significant step toward digitizing trade…The overall efficiency it brings to trade finance ensures cost effectiveness, quicker turnaround and potentially unlocks liquidity for business.”
Featured image from Shutterstock.
Last modified: July 3, 2020 12:03 PM UTC