11 Indian banks to launch blockchain-linked fund for SMEs

YES Bank and Kotak Mahindra Bank are some of the member lenders.

Eleven banks in India have joined forces to launch the country’s first blockchain-linked funding designed for credit-short SMEs, reports The Economic Times. 

Also read: Indian banks team up in blockchain-powered trade finance network

Banks are working to set up a live network that aims to reduce the time it takes for supply-chain financing. In its first phase, supply-chain vendors first need to register themselves to digitise records.

With distributed ledger technology, banks can make the process more transparent and secure. The network also aims to give banks access to public credit data and remove the information hierarchy between large corporates and SME lenders.

“The core objective of having such a ledger-network is to ensure transparency in credit disbursement, especially in the underbanked section,” Abhijeet Singh, head of business technology at ICICI Bank said. 

The launch of a common blockchain network also aims to reconcile the varying technological platforms of banks, logistics partners, customs and other entities so as to allow players to monitor the flow of trade on a single platform, added Akhil Handa, head of fintech and new business initiatives, Bank of Baroda. 

Member banks include ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, YES Bank, Standard Chartered Bank, RBL Bank and South Indian Bank. IndusInd Bank, State Bank of India and Bank of Baroda are participating in the consortium meetings as outside members.