ICICI, HDFC, Axis & 8 Other Banks Join Forces For Blockchain Based SME Funding Platform
This is one of the largest collaboration for helping SMEs with Blockchain
This can be one of the largest joint operations by 11 major banks of India, and the objective is to help Small and Medium Enterprises in India.
And the catalyst here is blockchain.
Is this a landmark moment for the Indian banking sector?
11 Major Banks Join Forces For Blockchain Based SME Funding
ICICI Bank, HDFC, Axis, Kotak Mahindra, Yes Bank, Standard Chartered Bank, RBL Bank, South Indian Bank have joined their forces, and decided to collaborate for one of the largest blockchain based campaign.
While these 8 banks are the core participants, IndusInd Bank, State Bank of India and Bank of Baroda are participating as outside members.
These 11 banks are building a common platform based on the blockchain, which will help SMEs to get loans and fundings seamlessly, and faster.
Abhijeet Singh, head of business technology at ICICI Bank said, “The idea of having such an organisation is to remove any communication hurdle among the different banks. A network can only thrive if the entire ecosystem is working in synergy through a single network.”
How WIll This Blockchain Collaboration Work?
This whole collaboration between 11 major banks for using Blockchain is being conducted by Blockchain Infrastructure Company (BIC).
To start with, these banks will focus on loans related with supply-chain management financing of SMEs, pan-India.
Using Blockchain technology, public-credit data of SMEs will be shared on a common platform, which will be accessed by all the participating banks.
This uniform access of information will help the banks to approve or reject the loans quickly, and will enable more SMEs to apply for loans, via one common platform.
Singh said, “The core objective of having such a ledger-network is to ensure transparency in credit disbursement, especially in the underbanked section.”
Why Blockchain Will Be Helpful?
As per Viral Acharya, Deputy Governor, RBI, very small percentage of SMEs and small businesses have access to credit facility from banks, and this new Blockchain based initiative will help them to bridge this gap.
Creation of a common, accessible platform will help the SMEs to contact the banks, and secure their loans (for supply-chain, as of now), quickly.
Besides, the different entities of the business: supply-chain players, banks, logistics partners, customs etc use different software, tools and systems as of now, which makes the process of loan dispersment tough, and time-taking.
Blockchain, will create a common platform, which will help to remove this obstacle.
And lastly, the security and integrity of data: Once a data is entered into a Blockchain network, it cannot be changed. This will induce more security and trust into the whole system.
We will keep you updated, as more details come in.