We’re just into the second week of the new year, and it is already turning out to be a pretty good year for blockchain technology in India. Considered as a potential game changer for the banking industry, blockchain allows for transactions and data transfers to be completed in just a matter of a few seconds through a peer-to-peer computer network, with no dependence on a third party. In other words, it can be described as a decentralized public ledger which records transactions and ownership of the cryptocurrency.
The year started with Yes Bank announcing about its implementation of a multi-nodal blockchain transaction to fully digitize vendor financing for one of its client, Bajaj Electricals. This was followed by private sector bank, Axis Bank, which is the third largest private sector lender in the country, announcing about its usage of blockchain solutions for its operations, and becoming the third bank in India to do the same. Prior to this, ICICI Bank had announced about using blockchain last year and Yes Bank started using blockchain in the first week of this year.
And now, RBI’s research arm, the Institute for Development & Research in Banking Technology (IDRBT), has published a report stating that it has tested the blockchain technology for core banking processes in the country and considers that now the time is right for the technology’s wide adoption in India.
The white paper named “Applications of Blockchain Technology to Banking and Financial Sector in India” is a hard work of two years study, research, and interactions with academicians, organizations, banks and technology partners working in the area.
According to the report, the blockchain technology has the potential to address certain limitations of the current financial processes by modernizing, streamlining and simplifying the traditional siloed design of the financial industry infrastructure with a shared fabric of common information. The advantages brought of the technology can be broadly classified into cost savings, efficiency, and transparency.
The report highlights the fact that about how in order to evolve into a cashless society, many of the central banks all around the world including England, Sweden, Netherlands, and Canada have taken to exploring the use of blockchain technology for digitising their currencies. Seeing this, many others have also started looking into the idea.
“From a technological perspective, we feel that BCT has matured enough and there is sufficient awareness among the stakeholders which makes this an appropriate time for initiating suitable efforts towards digitising the Indian Rupee through BCT,” the report said.
One of the various benefits of BCT that common people will able to avail is a significant reduction in the heavy fee charged on international money transfer conducted over a blockchain style ledger. It will at the same time also make the process a whole lot easier and quicker.
Considering the fact that the apex bank of India, the RBI, has now given a green signal to BCT, the years ahead could see a massive usage of blockchain technology in India and a complete change in the country’s banking and financial services.
[Top Image: Shutterstock]
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