MUMBAI: Foreign lender HSBC on Monday said it has successfully executed a blockchain-enabled live trade finance transaction between ArcelorMittal Nippon Steel India and UAE's Universal Tube and Plastic Industries.
Benefits of executing such a transaction include enhancing transparency and security for all parties, and reducing document negotiation cycle time to around one day from a week, it said.
The transaction reinforces the commercial and operational viability of blockchain as an alternative to conventional exchanges for paper-based documentation, as per a statement from HSBC.
In the transaction, ArcelorMittal Nippon Steel (AMNS) sold goods to Universal Tube, and the transaction was end-to-end paperless carried out on a platform built on blockchain technology, it said, adding that it involves digitisation of the end-to-end 'Letter of Credit' (LC) transaction.
The solution applied in this transaction is an upgrade for organisations engaged in international trading of goods, as it allows all parties to use a single unified platform thereby streamlining and simplifying the process, it said.
The LC was issued by HSBC UAE for the importer, Universal Tube and Plastic Industries with HSBC India acting as the advising and negotiating bank for the exporter, AMNS India, it specified.
AMNS' chief executive Dilip Oommen said such a transaction gives it a competitive edge and the steelmaker is continuously looking at exploring avenues to strengthen its capabilities to automate and digitise processes.
"The benefits and transformative impact of this technology are evident and we are confident that it will lead to greater adoption by corporates for their trade finance requirements," HSBC India's chief executive Hitendra Dave said.