Blockchain’s impact on India’s banking sector revealed

Almost all leading banks in India are engaged in blockchain-related initiatives

Indian banking sector

Blockchain’s impact on India’s banking sector revealed. Source: shutterstock.com

GlobalData stated that the Indian banking sector is expected to grow in 2020 and beyond due to the fact several leading banks proactively investing in blockchain platforms.

In September 2019, ICICI Bank, Axis Bank, and Yes Bank have joined JP Morgan’s blockchain platform, the Interbank Information Network (IIN). The partnership enabled faster cross-border payments by providing secure exchange information to banks at a lower cost.

Along with that, 11 Indian banks, including HDFC, Kotak Mahindra, and Standard Chartered have formed a consortium, introducing a blockchain-linked loan system for SMEs (small and medium enterprises) in the country.

Data revealed that SBI, a public sector bank, has been working on the use of blockchain for remittances, reconciliation, and trade finance. It has already presented blockchain-based smart contracts and KYC solutions.

Blockchain brings accountability into trade financing since the Indian banking sector has been struggling with loans turned into non-performing assets (NPAs).

It would help banks to have a database of documents related to assets, obtain data-driven price discovery of stressed assets, and automate the efforts to sell NPAs.

While it is still early days for blockchain in the country’s banking sector with banks using it on an experimental basis, the recent collaborative efforts of the leading banks indicate a more widespread adoption going forward. In addition, with the Ministry of Electronics and Information Technology currently preparing an approach for developing a ‘National Level Blockchain Framework’, the technology’s potential for mainstream use in the banking sector is only set to increase further in the coming years
Sandeep Kolakotla, Technology Analyst at GlobalData

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