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Blockchain hits India shore: Part 5

In our last update on blockchain (Part 4), we updated on the consortium that SBI & 14 other banks were working on to develop interbank use cases for blockchain technology.

Now we have more news coming in. The overall roadmap seems to be with a focus on ‘addressing fraud’. Growing NPAs have been a concern with most of the Indian banks and the PSU’s have been the worst hit (7-15% Gross NPA). SBI being the largest bank, the NPA in absolute figure is way beyond any other bank. The reasons are both market related and as well as banks internal related processes & policies. We had earlier highlighted how BCT use cases become much stronger in a multi variant, multi geo, multi stakeholder scenario.

The SBI initiative ‘Bankchain’ aims to address this specific scenario and the initiative has 10 other banks other than technology partners. The primary objective is to have a common sharing of trade finance & advances/ loan documents with all related transactions being recorded as part of the blockchain. This will not only bring in transparency and availability of data wrt customers & their behavior across the set of the participating banks but will also act as a deterrent for those customers who bets on gaming the system by leveraging the existing lacunae/ inefficiency in proper information sharing among the banks/ financial institutions.

Weeding out the ‘bad apples’ can also have a positive impact on not only minimizing bad loans/ NPA’s but can also bring operational efficiency in the banking system. The IDRBT whitepaper also had highlighted that the best start use cases for BCT is along the consortium model. Taking a cue from both, the Bankchain consortium can also help in tracking any ‘diversion of funds’ from any creditor who has taken a consortium loan from multiple banks who are part of the Bankchain initiative.

The best part of this initiative is that it has given more teeth to the banks w/o the need of struggling to do an entire transformation on its own individually. In coming days, we expecte the initiative to become a more inclusive with other banks/ financial institutions joining in, sharing of KYC across the chain and developing more advanced use cases for better financial transaction monitoring.

Keep watching this space for more.


  1. http://www.thehindu.com/data/Details-of-NPA-figures-of-public-private-sector-banks/article16670548.ece
  2. http://economictimes.indiatimes.com/markets/stocks/news/sbi-takes-lead-in-blockchain-to-use-it-to-prevent-fraud/articleshow/57178212.cms
  3. http://www.coindesk.com/state-bank-of-india-launches-new-blockchain-finance-consortium/


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