Owned by India’s richest man Mukesh Ambani, the oil and gas conglomerate Reliance Industries used Blockchain for its first in history trade finance transaction.
Reliance Industries recently held a live Blockchain-based trade finance transaction in cooperation with Tricon Energy, a US-based global chemical distributor, a press release of HSBC India stated.
The end-to-end transaction was secured by the country’s banking sector leader HSBC India and ING Bank, Brussels. For its implementation, a Blockchain platform Corda Enterprise consortium R3 was used.
The platform was used to issue and manage an electronic bill of lading and was integrated with the product of trade finance digitization firm Bolero International.
Using the Blockchain platform, ING Bank issued a letter of credit for Tricon Energy (importer) with HSBC India as the consulting and negotiating bank for Reliance Industries (exporter). A Letter of Credit is a bank guarantee of payment from the buyer to the seller.
“The use of Blockchain is a significant step towards digitizing trade. The overall efficiency it brings to trade finance ensures cost efficiency, quicker turnaround and potentially unlocks liquidity for businesses,” marked HSBC India’s Head for Global Banking and Markets Hitendra Dave.
Importers and exporters now use paper letters of credit to justify transactions, with each party sending documents either by mail or fax. This manual process not only slows down the pace of trade but also increases its cost.
The Blockchain-powered trade finance platform in its turn is used to digitize this process, thereby saving time and costs.
“The use of Blockchain offers significant potential to reduce the timelines involved in exchange of export documentation from the extent 7 to 10 days to less than a day,” said Srikanth Venkatachari, joint chief financial officer at Reliance Industries.