15 banks of the country including SBI, HDFC, ICICI have formed a new company named IBBIC to adopt cryptocurrency technology. Due to this fraud will be completely controlled.
LC or Letters of Credit is very important for business.
Moving forward in the direction of technology advancement, 15 banks of the country have together decided to adopt blockchain technology. This is the same technology on which cryptocurrencies like bitcoin, ethereum, dogecoin are based. In fact, 15 major banks of the country including SBI, HDFC, ICICI, Kotak Mahindra Bank, Axis Bank have formed a new company named Indian Banks Blockchain Infrastructure Company Private Limited (IBBIC).
It is believed that with the help of this technology, the MSMEs sector will be rejuvenated and the possibility of fraud will be reduced to zero. IBBIC will basically solve Letters of Credit (LCs), GST Invoice, E-Way Bill related problems through technology. Due to this, paper work will be significantly reduced as well as the time taken in the transaction process will also be less. Apart from this, every type of transaction will be on record and secured.
LC very important for business
LC or Letters of Credit is very important for business. It is issued by a bank. When a bank issues an LC, it promises to the issuing entity that the buyer will pay the money in time. If the buyer is unable to do so, the bank pays the dues to the entity receiving the LC. In simple words, it can be called bank guarantee. LC is more needed especially in matters of import and export.
Invoice will be converted into token for payment
If Letters of Credit is issued in the form of a blockchain technology based token, then the time taken in the process will be reduced. Apart from this, there will be no scope for human error as well as there will be no possibility of fraud. With the help of this technology, the basic invoice will be converted in the form of token. This token will be used for payment.
This system will start working within a year
According to the report of Business Insider India, this system will start working within the next one year. Also, all 15 banks will have an equal stake of 6.66 per cent in the new company. If any new bank or financial institution wants to join it, then it can join at any time.
These are 15 member banks
Among the 15 member banks, there are 4 government and 11 private sector banks. There are four government banks, SBI, Canara Bank, Indian Bank and Bank of Baroda. Apart from this, private banks include HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Axis Bank, IndusInd Bank, Yes Bank, RBL Bank, IDFC Bank, South Indian Bank, and Federal Bank. Apart from this, an international bank Standard Chartered is also included in this club.
Infosys IT Support
The system will be designed on Infosys’ blockchain based platform Finacle Connect. SBI and Axis Bank have used it on an individual level as a pilot.
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