Blockchain space in India has witnessed another mammoth move. Similarly, One of the largest private sector firms in the world and the largest in India: Reliance Industries Gets Paid On Blockchain.
The trade finance transaction took place between the major three companies. Those are Tricon Energy, a global chemical distributor from the U.S., and Indian Oil and Energy conglomerate Reliance Industries.
The blockchain used was reportedly R3’s Corda blockchain. Corda’s blockchain platform is a “single shared application, rather than requiring multiple isolated digital systems across various counterparties, located around the globe.”
What was the transaction?
India: Reliance Industries Gets Paid On Blockchain.-The transaction was a Letter of Credit, which is equivalent to a bank guarantee of the buyer’s payment, for the shipment between the two energy firms. Furthermore, Blockchain solved the major problem of time by reducing how much was necessary to process the export documentation. This procedure usually takes 5-10 days, whereas with blockchain it is believed that it could be completed within a day.
Considering the importance of a Letter of Credit. It is very significant that the speed for processing and reducing major time issues with enhanced security for the export transactions be present.
The announcement stated:
This Transaction validates the commercial and operational viability of blockchain as an alternative to conventional charges for paper-based documentation.
There were two banks that facilitated this transaction.
The Letter of Credit was issued by ING Bank on behalf of the importer- Tricon Energy USA. Similarly, HSBC Bank was the negotiator for the exporter- Reliance Industries.
According to the Head of HSBC India’s Global Banking and Marketing, Hitendra Dave, who spoke about the significance of blockchain technology in trading and said:“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.”