State Bank of India to Begin Tests of Smart Contractsbr>
The State Bank of India (SBI) will be rolling out beta versions of smart contracts and know-your-customer (KYC) solutions next month.
“By next month, we should have two beta production solutions ready for use by the 27 banks,” said SBI innovation head Sudin Baraokar. We will also invite further participation. The beta production that will be ready are smart contracts, and second is KYC.”
Smart contracts are self-executing contracts with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network.
According to Baraokar, smart contracts can be used for simple things like non-disclosure agreement. He said that the bank processes a lot of IT procurement and that it can be implemented using blockchain.
The bank’s smart contracts-based self-managing KYC technology enables SBI to increase the efficiency of financial transactions without having to compromise on data confidentiality and transaction security.
Baraokar said the blockchain-based systems have been developed by Bankchain, India’s first blockchain consortium for banks that was launched earlier this year. BankChain members include State Bank of India, ICICI Bank, DCB Bank, Kotak Mahindra Bank, Federal Bank, Deutsche Bank and UAE Exchange among others.
SBI is an Indian public sector banking and financial services company. While it is government-owned, it is not the central bank of India. State Bank is India’s largest bank and merged in April 2017 with five of its Associate Banks (State Bank of Bikaner & Jaipur, State Bank of Hyderabad, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore) and Bharatiya Mahila Bank. That marked the first large scale consolidation in the Indian banking industry, and made SBI one of the top 50 global banks.