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In a First, 15 Banks Join Hands to Use Blockchain To Process Letter of Credits (LCs). Details Here

The blockchain-based technology will help Banks eliminate the the invoices on Goods and Services Tax (GST), paperwork, e-way bills. These in a way will reduce a few hours of transaction time and check frauds

New Delhi: With an aim to reduce transaction duration and eliminate the risk of frauds, in a first, as many as 15 banks have joined hands to use blockchain technology to process Letter of Credits (LCs). These 15 banks are set to start a new company which look after the process of LCs for domestic transactions by using blockchain technology, according to an ET report. 

  1. The blockchain-based technology will help Banks eliminate the the invoices on Goods and Services Tax (GST), paperwork, e-way bills. These in a way will reduce a few hours of transaction time and check frauds, bankers were quoted as saying by ET.
  2. Out of the 15 banks, there are four state-owned banks, 10 private lenders, and a foreign bank.
  3. The four state-owned banks are State Bank of India (SBI), Bank of Baroda (BoB), Indian Bank, and Canara Bank.
  4. Ten private banks are RBL Bank, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank, Yes Bank, South Indian Bank, Federal Bank, and IDFC First Bank.
  5. The lone foreign bank in the bloc is Standard Chartered.
  6. All banks will invest Rs 5 crore each in the newly formed company.
  7. The investment procedure will be completed by June 30.
  8. The total capital of the company is set to have Rs 75 crore.
  9. All banks will have a shareholders which will be proportionate, and a board comprising five-member shareholders.
  10. The shareholder directors are set to be appointed based on a rotation policy, the ET report says.

What is Blockchain?

Notably, Blockchain is a digital system that records information in a manner that checks the possibility of cheating, changing and hacking the system. 

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