Blockchain-Linked Funding For SMEs Planned By 11 Indian Banks

Blockchain, Innovation, News | January 28, 2019 By:

Major banks in India have joined forces to launch the country’s first blockchain-linked funding for small and medium enterprises (SME).

The 11 big lenders participating in the initiative include ICICI, AXIS, HDFC, Kotak Mahindra, YES Bank, Standard Chartered, RBL, South Indian Bank, IndusInd Bank, State Bank of India and Bank of Baroda. The meetings among the participating bank are being organized by a consortium called the Blockchain Infrastructure Company (BIC).

The goal of the initiative is to transform the face of lending to default-prone small firms. The participating banks have been working together to set up a live network that cuts timeframe in supply-chain financing, making it more transparent and secure.

“The idea of having such an organization is to remove any communication hurdle among the different banks,” said Abhijeet Singh, head of business technology at ICICI Bank. “A blockchain network can only thrive if the entire ecosystem is working in synergy through a single network. The core objective of having such a ledger network is to ensure transparency in credit disbursement, especially in the underbanked section.”

The planned blockchain network will allow the banks to access public credit data and help them make their lending more judicious and less risk-based. It will also remove the information hierarchy between large corporates and SME lenders in terms of availing credit from banks. The first phase will involve the setting up of a live network for supply-chain vendors from across the country, where they would be able to register themselves and digitize their records.