Today India’s Economic Times reported that a consortium of 15 banks have created a blockchain trade finance consortium. Called the Indian Banks’ Blockchain Infrastructure Co (IBBIC), the consortium will initially target domestic Letters of Credit.
The banks involved include India’s largest such as State Bank of India, ICICI and HDFC Bank, as well as Standard Chartered.
IBBIC aims to cut transaction times from 4-5 days to a matter of hours and reduce the volume of paperwork given Letters of Credit are very paper-intensive. However, another major issue in trade finance is fraud, specifically submitting paperwork to different lenders to raise more than the shipment value. Using a blockchain, it should be far harder to raise multiple Letters of Credit for the same goods shipment.
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