- Top Indian banks to engage in a blockchain-powered pilot project.
- The project will help to tackle loan fraud.
- Top banks including HDFC, SBI, and ICICI banks are in the project.
The Reserve Bank of India is calling on top Indian banks to join a blockchain financing project. Nearly a dozen prestigious institutions are working with the central bank to launch a blockchain-based pilot project focused on trade finance. This includes banks such as the HDFC Bank, ICICI Bank, and State Bank of India.
If the pilot testing is successful, it would help in preventing loan scams and fraud. This comes at a time when scammers got away with over $128 million in the name of fake cryptocurrency exchanges.
According to three people with knowledge of the situation, SettleMint from Belgium, Corda Technologies from the US, and IBM (NYSE:IBM) will offer technical assistance for the initiative spearheaded by the RBI Innovation Hub in Bangalore. Additionally engaged are the Union Bank of India, Axis Bank, and Bank of Baroda.
The project will be called the proof of concept and will utilize blockchain technology to improve the traceability of money flow. One of the project’s key focus areas is tackling the alteration of documents like Letters of Credit (LC). Blockchain technology can assist in preventing LC misuse and prevent any such alterations.
Making blockchain technology a component of the Core Banking System is the goal (CBS). Before the technology becomes standard practice, this specific project will test its applicability.
On the one hand, the Indian government seems to be pretty enthusiastic about blockchain technology. On the other hand, it seems like the country is discouraging cryptocurrency by levying a hefty tax on it. According to Bloomberg, the Indian council is likely to meet next week to discuss imposing an additional 28% tax on top of the 30% crypto tax.