Kotak Mahindra Bank has successfully completed an end-to-end trade finance transaction with a client over a blockchain.
According to a report, the bank teams up with Deloitte to complete the trade finance test with partner bank JP Morgan Singapore.
A traditionally paper-intensive process, trade finance transactions are enabled by a letter of credit (LC). The letter sees bank guaranteeing a buyer’s payment to a seller on an agreed date and is a critical document in any trade finance transaction, particularly in international transactions.
Manual oversight and the lack of efficiency in international trade could take several weeks to obtain a letter of credit. With blockchain technology the time taken is reduced to a few hours, Kotak Mahindra claims.
In its trade finance test, issuance of the letter of credit for outbound transactions, the transfer of trade documents for the inbound letter of credit and the transfer of funds – through Swift – were all facilitated using Deloitte’s blockchain technology.
More than that, Kotak Mahindra hinted at a future banking consortium dedicated to the development of blockchain solutions in areas including KYC (Know Your Customer), cross-border payments, import/export finance, supply chain finance, syndicated loans, regulatory auditing and more.
Additionally, Mahindra is already developing supply chain finance solutions in the country with IBM. Traditionally known as a hub for technology development, India is quickly becoming a hub for blockchain R&D, with the likes of Visa establishing an exclusive blockchain development center in the country, staffing upwards of 1,000 engineers and developers.