Reliance Industries, the largest Indian company in the private sector, successfully participated in its first commercial finance transaction based on blockchain technology.
In a first sector, the Indian oil and energy conglomerate Reliance Industries has concluded a commercial finance operation with the US Tricon Energy, a global chemical distributor.
The end-to-end "live" transaction was carried out on the Rca blockchain, confirmed a press release by HSBC India. Corda's blockchain platform is described by the press release as a "single shared application, rather than requiring multiple isolated digital systems through various counterparts, located all over the world".
HSBC and the other banking giant ING Bank Brussels have facilitated the letter of credit – the bank guarantee of a buyer's payment – of the shipment between the two energy companies in a completely digitalized transfer of ownership. Compared to the current deadlines of up to 7-10 days of processing export documentation, the blockchain solution facilitates the transaction in less than a day.
On time, the announcement boasted:
This transaction validates the commercial and operational feasibility of blockchain as an alternative to conventional exchanges for paper documentation.
In particular, the letter of credit was issued by ING Bank for Tricon Energy USA as importer with HSBC India, which participated as a negotiating bank for Reliance Industries as an exporter.
Underlining the "transformative impact" of blockchain technology in commercial finance, HSBC India's head of banking and global markets, Hitendra Dave, said:
"The use of blockchain is a significant step towards the digitalization of trade … The overall efficiency it brings to trade finance ensures a cost-benefit ratio, a faster turnaround and potentially unlocks liquidity for businesses ".
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