The Reserve Bank of India (RBI) has launched a blockchain-based trade financing pilot project in collaboration with top lenders including HDFC bank, ICICI Bank and State Bank of India, among several others, Economic Times reported, citing unidentified sources.
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Belgium-based SettleMint, U.S.-based Corda Technologies and IBM are reportedly providing technology support for the project driven by the central bank’s Innovation Hub in Bangalore, the report said.
The central bank’s project hopes to integrate blockchain technology into the core banking system to prevent letters of credit fraud.
Letters of credits serve as financial contracts between a bank and a beneficiary that guarantees transactions are made when agreed conditions are met.
The pilot project, called “proof of concept” in industry parlance, has begun with banks to run blockchain-backed systems to issue digital letters of credit, the report said.
Blockchain’s immutability could be used to mitigate tampering of documents recorded on the digital ledger.
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