State Bank of India has taken the lead in bringing lenders and tech companies together for using blockchain technology to share information among banks which will eventually help prevent frauds and tackle bad loans which are almost onefifth of banks’ loan book.
The SBI’s initiative, christened Bankchain, is in partnership with IBM, Microsoft, Skylark, KPMG and 10 commercial banks. The country’s largest lender has also tied up with a startup firm Primechain Technologies for this exercise. Axis Bank, ICICI Bank and Federal Bank, which are experimenting with this technology in some way or the other, have teamed up with SBI as well.
Blockchain, the technology behind cyber currency Bitcoin, follows the concept of a centralised registry that can be accessed by all members, and every event is registered as an unalterable ‘block’. “Being the largest bank, SBI has taken the lead in initiating blockchain, and we are in talks with banks and other companies for this,” said M Mahapatra, deputy managing director, SBI, confirming the development to ET.
“To start with, we have formed a forum which has proposed to start with trade finance and loan documents can be put on the block,” he said. Bankers said that digitally signed documents that are part of consortium lending and which have to be shared can be put up as a block so that they will be known to all members. (At present, they are either physically exchanged or mailed to each other). All the subsequent events related to the loan can be put on the block so that members can take informed decisions. Another business where blockchain can be used as a tool is in trade finance where there’s a risk of fraud with the merchant going to multiple banks with the same invoice to get the bill discounted. If documents are put on the blockchain, everyone will know which invoices have been discounted by Bank X and this could prevent multiple discounting frauds. “Today, there are several banks pursuing individual blockchain strategies. These individual initiatives will be meaningful when they are used by all the banks. For instance, a payment system such as NEFT cannot be successful if it is adopted by only one bank,” said a senior bank official .
christened Bankchain, is in partnership with IBM, Microsoft, Skylark, KPMG and 10 commercial banks
Source: https://www.pressreader.com/
