The bitcoin bull run may have ceased from the beginning of this year but in India, the first two weeks of 2017 have certainly brought a lot of cheer for blockchain, the software that maintains a decentralized public ledger which records transactions and ownership of the cryptocurrency.
Earlier this month, Yes Bank announced that it has implemented a multi-nodal blockchain transaction to fully digitize vendor financing for its client Bajaj Electricals and on Monday, Axis Bank became the third lender in India to announce usage of blockchain solutions for its operations, after its peers ICICI Bank and Yes Bank.
Followed by the news of these commercial initiatives, the Institute for Development & Research in Banking Technology (IDRBT), the research arm of RBI, released a report which said that the time is ripe for blockchain technology adoption in India and it has tested the technology for core banking processes in the country.
In its white paper -- Applications of Blockchain Technology to Banking and Financial Sector in India – the IDRBT said: “Blockchain has the potential to address certain limitations of the current [financial services] processes by modernizing, streamlining and simplifying the traditional siloed design of the financial industry infrastructure with a shared fabric of common information.”
R Gandhi, Deputy Governor of RBI and Chairman of IDRBT said in the report: “The blockchain technology (BCT) provides tamper-evident recording of the linked transaction history in a distributed network, and has the potential to disrupt the financial business applications.”
The study further made note of the fact that in a bid to evolve towards a cashless society, many central banks around the globe including Canada, England, Sweden, and Netherlands have started exploring the use of blockchain for digitising their currency, and many more are converging to the idea.
“From a technological perspective, we feel that BCT has matured enough and there is sufficient awareness among the stakeholders which makes this an appropriate time for initiating suitable efforts towards digitising the Indian Rupee through BCT,” the report further said.
In an earlier conversation with Moneycontrol, Sandeep Goenka, COO and co-founder of Zebpay, India’s largest bitcoin exchange had said that some experts scrutinize the digital currency, bitcoin, as it is deregulated and maintains the anonymity of the its holders, but do not talk much on the benefits one can reap from the underlying software – blockchain -- that empowers it.
Giving an example, he said that heavy fee charged on international money transfer could be reduce to a negligible sum while making the process instantaneous if it is conducted over a blockchain style ledger.
Now with the apex bank onboard to exploit the disruption this technology bears, one could say that an exponential change in the established ways of India’s financial services is not far.