Oil and gas conglomerate Reliance Industries – owned by India's richest person, Mukesh Ambani – has used blockchain to conduct its first trade finance transaction.
According to a news release from HSBC India shared with CoinDesk on Sunday, Reliance Industries has recently executed a "live" blockchain-powered trade finance transaction in collaboration with US-based global chemical distributor Tricon Energy.
The end-to-end transaction was facilitated by banking majors HSBC India and ING Bank, Brussels, and carried out on enterprise consortium R3's Corda blockchain platform, the release adds.
The Corda platform was integrated with a platform provided by U.K.-based trade finance digitization firm Bolero International, and was used to issue and manage an electronic bill of lading.
Using the blockchain platform, a letter of credit was issued by ING Bank for Tricon Energy USA (the importer) with HSBC India as the advising and negotiating bank for Reliance Industries, India (the exporter), the release explains. A letter of credit is a bank guarantee for a buyer's payment to a seller.
HSBC India's head for global banking & markets, Hitendra Dave, said:
Currently, importers and exporters use paper-based letters of credit to underpin transactions, with each party sending documents either by post or fax. This manual process not only slows the pace of trade, but also increases the costs.
The blockchain-powered trade finance platform, on the other hand, is aimed to digitize that process, thereby saving time and cost.
"The use of blockchain offers significant potential to reduce the timelines involved in exchange of export documentation from the extant 7 to 10 days to less than a day," said Srikanth Venkatachari, joint chief financial officer at Reliance Industries.