Author: Jagdish Kumar, India
In order to provide its existing customers with new technology in banking sector, Bangalore based global information technology and software development firm, Infosys has announced the launch of India Trade Connect, a blockchain-based trade network in India.
The company in a statement said that this network will help its seven lender banks, that includes Axis Bank, ICICI Bank, IndusInd Bank, RBL Bank, Kotak Mahindra Bank, South Indian Bank and Yes Bank to address the trade finance process by using blockchain technology.
Functions used in the blockchain based network are bill collection, letters of credit, open account for trade, customer to customer, transactions for trade, business to customer transactions for trade, PO financing and invoice financing.
The new network is being used by the banks to run a successful pilot of Finacle Trade Connect, a blockchain technology based solution developed specifically to address the trade finance process requirements of banks, the statement adds.
This comes on the backdrop of Punjab National Bank (PNB) lost over USD 2 billion under the letter of credit (LoI) issued to Nirav Modi, a diamond trader which benefited of the loophole existed under the current system of LoI issued for exports.
Commenting on this, Sanat Rao, Chief Business Officer, Infosys Finacle said,
“Digitization of Trade Finance processes using distributed ledger technology offers immense potential to eliminate the friction, cut costs and increase revenue through new business products that are now viable using the modern technologies.”
“Blockchain technology offers unprecedented opportunities to transform banking. Like any innovative technology, the usage of blockchain-based applications will gradually increase from early adopters to others who will join based on proven and tangible benefits,” Rao added.
Anil Agarwal, EVP & Head – Transaction Banking, Axis Bank, said,
“The potential of India Trade Connect initiative to digitize end-to-end trade finance operations and bring about a speedy, transparent and secure experience for our corporate clients.”
ICICI Bank was the first in the country and among few globally to pioneer cross-border open account trade finance and remittance transactions on the blockchain platform. this will enable automation, increase transparency as well as enhance efficiency across trade and supply chain operations, Ajay Gupta, Senior General Manager, ICICI Bank said.
Ramesh Ganesan, Senior Executive Vice President, Transaction Banking, IndusInd Bank and Shekhar Bhandari, Business Head- Global Transaction Services & Precious Metals, Kotak Mahindra Bank said that This platform will help take a quantum leap in digitization by improving the processing efficiency of trade transactions and will unleash the true potential of Trade Finance.
Varun Bakshi, Head –Trade Products, RBL Bank said,
“This emerging and transformative technology makes it possible for banks to operate on a single source of truth, and eliminate potential risks and frauds.”
Infosys statement added that network will create new business opportunities for participating banks, while eliminating the inefficiencies in the existing trade processes and enabling everyone involved in a transaction to have a single source of the truth. It trade connect will enable increased automation and transparency, while helping efficiently manage risks in trade and supply chain financing operations.