Infosys Limited, the second largest software exporter in India, has developed a network of specialist retailers on the basis of the blockchain to combat fraud in the Indian banking industry. In partnership with seven banks in the private sector, Infosys will check the network of trade financing with the aim of increasing security and transparency in the financial sector.
The project involves seven private Indian credit institutions Axis Bank Ltd, ICICI Bank Ltd, IndusInd Bank Ltd, Kotak Mahindra Bank Ltd, RBL Bank Ltd and South Indian Bank Ltd. Infosys also offers several international banks to join the network of trade financing. Sanat RAO (Sanat Rao), Director, business development at Infosys Finacle, said:
«We are very advanced in discussions with a consortium of Australian banks. I think that soon we will publish details of the agreement.»
The Indian banking industry faced problems due to a succession of frauds which go hand in hand with poor banking infrastructure and unreliable employees. Reportedly, over the last five years, India has doubled the number of Bank fraud, and the total amount received by the fraud approached $4 billion. However, the introduction of blockchain technology can enhance the safety and transparency of trade Finance.
Trade financing is a difficult task, as to complete the transaction required the participation of several parties. The use of the technology of the blockchain for trade Finance may reduce the length of the process, reducing the amount of paper work. Network Infosys makes the transaction transparent to all stakeholders — importers, exporters, regulators, financial services buyers and sellers, insurers and service providers.
Among participating banks — Industrial Credit and Investment Corporation of India (ICICI), who has experience of using the technology of the blockchain to handle trade Finance operations. The company has already created an adapted blockchain-a platform for processing international payments and drew on it with 250 corporate enterprises.
ICICI Bank has relied on the technology of the blockchain and is proud to be the first Bank in the country, which handles cross-border payments using the technology in partnership with major Dubai lender Emirates NBD. Chanda Kochhar (Kochhar Chanda), CEO of ICICI Bank, said:
«ICICI Bank has extensive experience using the latest technologies to implement new paradigms in banking. We were the first who began to engage in cross-border trade Finance and open accounts and the transfer of funds using the blockchain».
Recently, HSBC and ING has completed the operation of trade financing on the blockchain for Cargill. The deal was in the export of soybeans from Argentina to Malaysia. The letter of credit was issued by HSBC and ING acted as a banking consultant. The whole process took 24 hours instead of the standard 5-10 days. The letter of credit was exchanged on the blockchain, while the waybill and other elements of the transaction were conducted without the involvement of technology.