Private sector Kotak Mahindra Bank (KMB) today said it has lowered the turnaround time for approval of trade financing to few hours from the earlier up to 30 days, a move that will help exporters gain operational efficiency. With the help of ‘Blockchain’ technology, the bank has been able to reduce the time taken for a Letter of Credit (LC) from 20-30 days to only couple of hours, KMB said in a statement.
The bank claimed that it is the first lender to have successfully completed the PoC (proof of concept) for end-to- end trade finance transaction for one of its clients and will soon roll out this technology for all customers. LC, a negotiable instrument, is a critical document in both domestic and international trade finance and also one of the most tedious documents to process in banking.
The time involved in completing the process deprives exporters from utilising their sale proceeds efficiently, it said. The verifying, approving and documenting process takes time given that multiple parties from different countries with varied regulatory frameworks are involved in the process, it said.
Blockchain technology not only eliminates duplicity of data but also integrates data to a central cloud-based access system for participants in a transaction, it added.