Reliance receives India’s first LC payment via blockchain
HSBC Holdings has executed a letter of credit (LC) payment using blockchain for an export by Reliance Industries to US-based Tricon Energy
Mumbai: In a first for India, HSBC Holdings Plc has executed a trade finance transaction using blockchain for an export by Reliance Industries Ltd (RIL) to US-based Tricon Energy. The blockchain-enabled letter of credit (LC) transaction substantially reduced the time taken for such deals, RIL said in a press release. “The use of blockchain offers significant potential to reduce the timelines involved in the exchange of export documentation from the extant 7-10 days to less than a day,” said RIL joint chief financial officer Srikanth Venkatachari.
The transaction allowed a digital transfer of the title of goods from the seller to the buyer. The letter of credit was issued by ING Bank for Tricon Energy USA (importer) with HSBC India as the advising and negotiating bank for RIL.
HSBC’s head of global banking and markets, Hitendra Dave, said the use of blockchain has a significant impact on trade finance transactions and enables greater transparency and enhanced security in addition to making it simpler and faster.
Explaining the current system, Reliance said that at present, buyers and sellers use paper-based letter of credits to underpin transactions and physical documents are sent to each party in the transaction by post, courier or fax. While the current system provides a high level of certainty, the time and cost involved in processing the documents are deterrents for exporters.
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