Kotak Mahindra Bank redefines trade finance with blockchain technology

Kotak Mahindra Bank, India’s first bank which successfully completed the end-trade finance transaction, will soon roll out the blockchain technology that will help reduce the time taken for the letter of credit (LC) from 20-30 days to only couple of hours.

Letter of credit is a negotiable instrument that is most tedious document to process in banking for both the domestic and international trade finance. This advanced technology integrates data to a central cloud-based access system for its participants in a transaction and also eliminates duplicity.  

Kotak partnered with Deloitte and used the blockchain technology to complete LC transactions with JP Morgan Singapore as partner bank (outbound - LC issuance; inbound - document & bill lodgement) - from issuing the LC for outbound transactions to transferring trade documentation and bill lodgement for inbound LCs to facilitating the transaction funds using Swift.

KVS Manian, President – Corporate, Institutional & Investment Banking, Kotak Mahindra Bank said, "We have been investing in technology solutions that create tremendous value for customers. This transaction is the beginning of a journey on integrating blockchain and moving towards full-scale adoption, thus giving Indian importers, exporters and domestic traders the best solution”