IBDIC Working To Develop LC On Blockchain
Indian Banks' Digital Infrastructure Company (IBDIC) is currently working on scoping the implementation of domestic Letter of Credit (LC) issuance on blockchain as one of its use cases, the government said on Monday, citing information from the Indian Banks' Association (IBA).
Minister of State for Finance, Bhagwat Karad, stated in the Lok Sabha that, as per information provided by IBA, only a few banks are currently utilising blockchain technology on a small scale.
He noted in a written reply that the issue of interoperability of such a platform between banks is not present. Furthermore, he added that Indian Banks' Digital Infrastructure Company (IBDIC), formerly Indian Banks' Blockchain Infrastructure Company (IBBIC), is incorporated to provide a platform for exploring, building, and implementing digital solutions for the Indian financial services sector.
Currently, it is working on scoping the implementation of domestic Letter of Credit (LC) issuance on blockchain as one of its use cases. The consortium consists of 18 banks, including all top public and private sector banks in India.
Karad further mentioned that the Reserve Bank Innovation Hub (RBIH) has conceptualised the idea of an interoperable Distributed Ledger Technology (DLT) platform for the financial landscape and conducted a successful proof-of-concept (POC) test in June 2022 with banks, DLT fabric partners, DLT application layer partners, and fintech startups.
He stated in his written reply in Lok Sabha that there is no proposal to set up guidelines or prescribe a model common blockchain technology platform for these banks.
PSB Alliance, set up by state-run banks, is planning to establish a digital balance confirmation portal that will also provide other microservices, including multi-party underwriting and a common blockchain technology platform for the issuance of letters of credit, among other applications to be used by corporate borrowers.
The proposed platform will also be able to support the process of writing and deployment of smart contracts and will integrate with the existing enterprise software of all PSBs.
PSB Alliance aims to onboard a host of regulated entities, including both unlisted and listed firms, partnership and cooperative firms, funds, and trusts.
Seeing the initial projections, around 12 lakh entities, including cooperative firms, can be onboarded in the upcoming five years. PSB Alliance acts as an intermediary for all public-sector banks and creates common platforms or applications, focusing on delivering non-financial banking and financial services to customers' doorsteps.
