HSBC and Reliance issued a joint statement announcing their successful completion of a transaction using blockchain. The situation? A blockchain-enabled letter of credit transaction for a trade shipment between Reliance and the US-based Tricon Energy.
According to CFO Srikanth Ventakatchari, its use reduced the timeline involved in the exchanging of export documentation from seven days down to seconds.
The exercise was pulled off by integrating the blockchain platform with the electronic bill of lading (eBL) platform to issue and managing an electronic bill of lading.
The statement claimed that the solution is a significant improvement for any organisation involved in buying and selling goods internationally, as it brings each party to a sameo platform. Blockchain solutions is a distributed database that maintains a continuously-growing list of ordered records called blocks and is deemed to be very transparent as all the stakeholders can view progress real time.
The LC was issued by ING Bank for Tricon Energy US with HSBC India as the advising and negotiating bank for Reliance.
Explaining the current system, the statement stipulated that their feat could completely overtun the industry for both buyers and sellers, as both use paper-based LCs and physical document transfers. Whilst the current system provides a high level of certainty, the time and cost involved in processing the documents are deterrents for exporters.