RBI welcomes collaboration with banks to develop proof of concept blockchains

The (RBI)-Reserve Bank of India is ready to collaborate with many top Indian banks to develop a proof-of-concept blockchain project concentrating on trade financing.

Which banks are participating in this project?

Those participating in the plan to combat loan fraud are HDFC Bank, ICICI Bank, and State Bank of India.

What will be allocated under this project?

The project will allocate digital versions of documents like letters of credit (LC) to control their alteration. Digital documentation could contain scams concerning billions of rupees, like those performed by Nirav Modi and Mehul Choksi.

Which technology will be used by the central bank?

The central bank plans to incorporate blockchain technology into its core banking system and will use this investigation to demonstrate its validity.

According to the report, IBM (IBM), Corda Technologies, and Belgium’s SettleMint are assisting technical help for the project, citing sources acquainted with the current situation.

What did the governor of the RBI say?

Although India’s central bank is reported for its anti-crypto attitude, Governor Shaktikanta Dar said blockchain technology might exist without cryptos. 

Last week, the governor of the RBI-Shaktikanta Das emphasized the need for a global strategy to regulate technology-based businesses, i.e., blockchain platforms. 

While delivering his speech at the FE Modern BFSI Summit 2022, Mr. Das said, “A regulator or a particular nation cannot link different blockchain platforms. Another example is decentralized finance, where financial applications are processed on a blockchain with minimum involvement of centralized intermediaries.”

Why did the governor suggest the threats of Defi?

Furthermore, the governor also suggested the threats of Decentralised Finance or Defi. But, he said, “Defi yields unique challenges to regulators as its obscurity and lack of a centralized governing body and legal indecisiveness can make established regulation ineffective. 

Therefore, it is a case for an internationally cooperated and regulated approach and inter-regulatory coordination to allow a comprehensive assessment of such movements and ease of risks.” 

Blockchain is a distributed ledger that records, shares, and synchronizes transactions in an electronic ledger using several computers.

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