New Delhi: With an aim to reduce transaction duration and eliminate the risk of frauds, in a first, as many as 15 banks have joined hands to use blockchain technology to process Letter of Credits (LCs). These 15 banks are set to start a new company which look after the process of LCs for domestic transactions by using blockchain technology, according to an ET report.
- The blockchain-based technology will help Banks eliminate the the invoices on Goods and Services Tax (GST), paperwork, e-way bills. These in a way will reduce a few hours of transaction time and check frauds, bankers were quoted as saying by ET.
- Out of the 15 banks, there are four state-owned banks, 10 private lenders, and a foreign bank.
- The four state-owned banks are State Bank of India (SBI), Bank of Baroda (BoB), Indian Bank, and Canara Bank.
- Ten private banks are RBL Bank, ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank, Yes Bank, South Indian Bank, Federal Bank, and IDFC First Bank.
- The lone foreign bank in the bloc is Standard Chartered.
- All banks will invest Rs 5 crore each in the newly formed company.
- The investment procedure will be completed by June 30.
- The total capital of the company is set to have Rs 75 crore.
- All banks will have a shareholders which will be proportionate, and a board comprising five-member shareholders.
- The shareholder directors are set to be appointed based on a rotation policy, the ET report says.
What is Blockchain?
Notably, Blockchain is a digital system that records information in a manner that checks the possibility of cheating, changing and hacking the system.
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