The Usage of Blockchain in the Indian Banking System
Written By: Akshata Pai
The Blockchain has been trending in India as a tech sector since its commencement in 2009. The Blockchain is a system of recording information that makes it very complex to change, hack or cheat the system. This technology is changing the wide range of industries working systems, right from the banking to healthcare and retail segments. The central bank of India, i.e., RBI has accepted blockchain technology for the financial system with due diligence. The attempt of this article to study the potential and impact of Blockchain in an Indian Banking System.
Blockchain technology offers many advantages over traditional banking systems such as:
Due to the nature of transactions taking place on the Blockchain, they are simpler, faster, and more secure. The transaction is verified because the entire network of blockchain users sees it. This system secures your information and data a lot more effectively than traditional means, such as sending in a fax to check the integrity of a company’s accounts.
Banks have been trying to step up their security systems, but there still exist some vulnerabilities. However, with Blockchain, banks will mitigate risks and keep an eye on fraud by using an effective distributed ledger system. The technology will be able to reduce cases of fraud by almost 90%.
Blockchain eliminates the need for third-party services, eliminating high fees charged by institutions like banks. A domestic letter of credit serves as a guarantee that the seller of a good or service will receive a refund upon arrival. An electronic invoice, also known as an electronic invoice, is tracking trade in goods and services to ensure that the business complies with tax laws.
The Bundesbank has launched its blockchain-based remittance solutions for NRIs. Similarly, Rakbank (Axis) serves retail clients in the Middle East, and Standard Chartered Bank (Singapore) Axis handles corporate trading and remittances. Axis, too, has developed an intra-bank transfer solution based on Blockchain.
With SBI and State Bank of India, it is planned to use blockchain smart contracts for KYC. With Emirates NBD, ICICI Bank has two blockchain-based solutions for remittances and trade finance. Axis Bank uses the Ripple cross-border transaction network to operate its remittance blockchain products.
The point is that the Indian banking system uses blockchain technology to help its customers by building a secure and secure network compared to the current system used by banks and other NBFCs. SBI uses global banks “blockchain technology called Link, which means peer-to-peer (P2P) networks of financial institutions and companies/fintech companies that subscribe to the technology. The bank uses Link to exchange payment-related information with other financial institutions.
Enterprise blockchain software company R3 has also made great strides in working with several multinational banks to implement blockchain technology. According to GlobalData, a leading data analytics company, India’s banking sector will see growth in mainstream blockchain adoption by 2020. Several top banks invest in blockchain platforms as part of their digital transformation initiatives. Another noteworthy development is the presentation of the National Blockchain Strategy by NITI Aayog, the political think tank of the Indian government, which is a boon to blockchain advocates in gaining relevance to fintech technology.
Blockchain technology, also known as Decentralized and Decentralized ledger technology, has gained awareness in India in the last two years. According to a report, Blockchain can create $5 billion in value for the Indian sector over the next five years. In September 2019, ICICI Bank and Axis Bank, which are among the banks at the forefront of the country in blockchain efforts, joined the IIN blockchain platform of JP Morgan’s Interbank Information Network (IIN) to enable faster cross-border payments and secure information exchange between banks at a lower cost.
The Blockchain is the game-changer for the banking system with the approval of the Central Bank of India. It requires due care and security follow-up, as the threat to cybersecurity has raised for the leak of personal information.