RBI to collaborate with Indian banks to build blockchain project

RBI to collaborate with Indian banks to build blockchain project

The Reserve Bank of India RBI hopes to collaborate with multiple top Indian banks to build a proof-of- concept blockchain project that focuses on trade financing.

As reported by The Economic Times, HDFC Bank, ICICI Bank and State Bank of India are among those taking part in the scheme to combat loan fraud.

The project will issue digital versions of documents, such as letters of credit LC, to prevent their alteration. Digital documentation could prevent scams involving billions of rupees, such as those perpetrated by Nirav Modi and Mehul Choksi.

The central bank intends to integrate the technology into its core banking system and to demonstrate the viability of the concept.

Sources familiar with the situation said that IBM, IBM Corda Technologies and SettleMint of Belgium are providing technical support for the project.

Governor Shaktikanta Das has stated that without cryptocurrencies, India's central bank is known for its anti-crypto attitude.

Last week, the governor of the RBI, Shaktikanta Das, emphasised the need for a global strategy to regulate technology-based businesses, such asBlockchain platforms.

In his speech at the FE Modern BFSI Summit 2022, Governor Das said that differentBlockchain platforms can't be linked to a regulator or a nation. Another example is of decentralised finance where applications are processed on a blockchain with minimal involvement of centralised intermediaries. The governor also pointed out the dangers of DeFi. He said DeFi causes unique challenges to regulators because of its anonymity and lack of a centralised governing body and legal uncertainties that can make conventional regulation ineffective. This is a case for a global collaboration and regulated approach as well as inter-regulatory coordination to enable comprehensive assessment of such activities and mitigation of risks.Blockchain is a distributed ledger that records, shares and synchronises transactions in an electronic ledger using several computers.