11 Indian banks team up to launch blockchain-linked funding project for SMEs

A consortium of 11 banking institutions in India is going to launch the country’s first blockchain-linked funding for small and medium enterprises (SME), The Economic Times reported.

Participating banks include ICICI Bank, Kotak Mahindra Bank, HDFC Bank, Yes Bank, Standard Chartered Bank, RBL Bank, South Indian Bank, and Axis Bank. In addition, IndusInd Bank, State Bank of India and Bank of Baroda are currently participating in the meetings as outside members.

The meetings among the representatives of the partnering banks are being organized by a consortium called the Blockchain Infrastructure Company (BIC).

“The idea of having such an organisation is to remove any communication hurdle among the different banks. A blockchain network can only thrive if the entire ecosystem is working in synergy through a single network,” said Abhijeet Singh, head of business technology at ICICI Bank.

The representatives have been meeting for quite some time now with the objective of setting up a live network that will reduce the time taken in supply-chain financing and enhance its security and transparency.

“The core objective of having such a ledger network is to ensure transparency in credit disbursement, especially in the underbanked section,” Singh said.

Through this network, the lenders will be able to access the public credit data, which would enable them to make better lending decisions with less risk. The blockchain-based system will also help eliminate the information hierarchy that exists between large corporates and SME lenders that seek 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.