HSBC and Reliance Industries execute first of its kind blockchain trade finance transaction

MUMBAI: In a first for India, British banking major HSBC executed blockchain enabled, live trade finance transaction jointly with Reliance Industries and Tricon Energy. "The use of blockchain offers significant potential to reduce the timelines involved in exchange of export documentation from the extant seven-ten days to less than a day," RIL joint chief financial officer Srikanth Venkatachari was quoted as saying in the statement.

The blockchain platform was integrated with the electronic bill of lading (eBL) platform to issue and manage an electronic bill of lading, it said, adding this allows a digital transfer of the title of goods from the seller to the buyer in the underlying trade.

Commenting on the transaction, Hitendra Dave, Head-Global Banking and Markets, HSBC India said: "The use of blockchain is a significant step towards digitising trade. It has a transformative impact on trade finance transactions and enables greater transparency and enhanced security in addition to making it simpler and faster. The overall efficiency it brings to trade finance ensures cost effectiveness, quicker turnaround and potentially unlocks liquidity for businesses. We’re delighted to partner with Reliance Industries and support enhanced digitisation in trade finance. We believe that the collaborative approach adopted to develop this technology has the potential to transform conventional trade finance.”

The statement claimed that the solution is a significant improvement for any organisation involved in buying and selling goods internationally, as it brings together all parties onto one platform.

The company statement said that this transaction validates the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation. At present buyers and sellers use paper-based LCs to underpin transactions. Physical documents are sent to each party in the transaction by post, courier or fax. While these paper documents provide certainty, the time and cost involved in processing them are deterrents for exporters and inters and impairs the pace of trade.