Attacking LC Fraud a Top Goal for India’s Blockchain-Based Project

Stung by the massive letter of credit scandal committed against Punjab National Bank (Feb 2018 DCW 44), India’s central bank, the Reserve Bank of India (RBI), has joined forces with a consortium of Indian banks to run a blockchain-based pilot project based on trade financing. A priority area of the project is to combat the tampering of documents and misuse of LCs.

The project will be driven by the Reserve Bank Innovation Hub (RBIH) which was set up in March 2022 as a wholly owned subsidiary of the RBI to serve as a catalyst for innovations in the Fintech sector.

Overall, the project aims to integrate blockchain technology into India’s Core Banking System (CBS). The pilot which will test application of the technology before it becomes established practice has begun with banks running blockchain-backed systems to issue digital LCs, according to The Economic Times.