Consortium of 11 Indian lenders to launch blockchain-linked funding for SMEs
ICICI Bank, Kotak Mahindra Bank, HDFC Bank and Axis Bank are a part of the consortium of 11 big lenders […]
Parul January 28, 2019
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ICICI Bank, Kotak Mahindra Bank, HDFC Bank and Axis Bank are a part of the consortium of 11 big lenders which will launch the country’s first blockchain-linked funding for small and medium enterprises (SME). This initiative aims to transform the face of lending to default-prone firms in the sector. Yes Bank, Standard Chartered Bank, RBL Bank and South Indian Bank are also a part of the consortium, whereas IndusInd Bank, State Bank of India and Bank of Baroda are currently participating as outside members. Blockchain Infrastructure Company (BIC) is currently organising the meetings between all participating lenders. According to Abhijeet Singh, Head of Business Technology at ICICI Bank, “The idea of having such an organisation is to remove any communication hurdle among the different banks. A blockchain network can only thrive if the entire ecosystem is working in synergy through a single network.” Singh continued that such a ledger network will ensure transparency in credit disbursement. Once in place, the network will benefit lenders by giving them the much needed access to the public credit data, thus helping them make their lending more judicious and less risk-based. It will also remove the information hierarchy between large corporates and SME lenders in terms of availing credit from banks. Latest central bank data showed that the outstanding credit of all commercial banks with the MSME sector as a percentage of the total outstanding corporate credit with banks is just 17.3 per cent.