On June 23, the Reserve Bank of India (RBI) announced that they are planning to establish a blockchain-based pilot project focusing on trade finance with the help of several big Indian banks. In an official statement, the RBI said that they have been closely watching blockchain technology and its implications. In order to mitigate their existing concerns regarding the lack of regulatory oversight on Bitcoin and other crypto-currencies, they are experimenting with a blockchain-based solution.
The Reserve Bank of India (RBI) has selected leading Indian institutions such as HDFC Bank, ICICI Bank, and State Bank of India to conduct a blockchain-based pilot project focusing on trade finance.
The pilot project, dubbed a “proof of concept,” would use blockchain technology to improve financial traceability. It also intends to avoid tampering with papers such as Letters of Credit (LC) by producing digital copies of them. Digital papers might help to avoid scams like those perpetrated by Indian businessmen like Nirav Modi and Mehul Choksi, who stole billions using forged paperwork.
SettleMint from Belgium, Corda Technologies from the United States, and IBM will offer technical assistance for the initiative, which will be led by the central bank’s Innovation Hub in Bangalore. According to the article, the project’s goal is to integrate blockchain technology into the Core Banking System (CBS).
Surprisingly, the Reserve Bank of India is also expected to adopt the same technology for the projected central bank digital currency initiative. By using a distributed ledger, the central bank will be able to detect transactions fraudulently made by third parties who impersonate the customers.
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