The Bangladeshi arm of Multinational investment bank and financial services holding company HSBC Holdings Plc has successfully conducted a transaction using the first blockchain-backed Letter of Credit (LC) in the country. Per the report from The Daily Star, the blockchain-backed LC transaction was used by the United Mymensingh Power Ltd to purchase 20,000 tonnes of fuel oil from Singapore.
The transaction was initiated using the Contour Platform that is built using R3’s Corda Blockchain technology. As reported, the transaction remarkably reduced the transaction time which typically takes about 5 to 10 days to just 24 hours while also reducing the cost of management involved in the transaction.
"I believe this will usher in a new era of routing international trade transactions as businesses and governments recognise transparency, security and swiftness in performing tasks using blockchain technology," said Md Mahbub ur Rahman, the Chief Executive Officer (CEO) of HSBC Bangladesh.
With the success of the first transaction, The Daily Star reports that HSBC hopes to scale the blockchain-backed LC transactions in domestic markets as it noted that “the potential efficiencies for domestic companies are tremendous."
HSBC is Known for Similar Solution Offering
HSBC has reportedly pioneered similar blockchain-based LC transactions in Malaysia back in October 2019 as reported. While the Letter of Credit for Bangladesh was used in oil purchase, that of Malaysia was used for the import of resin by Malaysia’s Simply Packing from a Singaporean company. The transaction was facilitated by HSBC’s Malaysia which served as the issuing bank, while HSBC Singapore acted as the advising bank.
The use of blockchain technology has been advancing in facilitating both local and international trades. Besides its deployment as a letter of credit, a Thailand Blockchain Community Initiative (BCI) joined hands with IBM back in October to extend the scope and reach of the blockchain-powered electronic letter of guarantee (eLG) platform to businesses of all sizes
