Axis Bank issued the industry’s first letter of credit (LC) on the Secured Logistics Document Exchange (SLDE), a government-backed blockchain-enabled platform, in what could be a sign that the regulator and government, despite their opposition to cryptocurrencies, are warming to blockchain technology.
ArcelorMittal Nippon and Lalit Pipes & Pipes Limited, a client of the bank, were engaged in the transaction (LPPL).
The commerce ministry launched such a digital platform in July of last year, with the goal of replacing the manual process of logistics document generation, exchange, and compliance with a digitised and secure document exchange system.
Axis Bank’s head of wholesale banking products, Vivek Gupta, stated, “Our bank aims to help our clients digitise their whole supply chain.” “With SLDE, we’re just getting started. This not only reduces risk for our clients by providing a faultless blockchain solution, but it also improves working capital.”
Transactions executed via the SLDE platform overcome all previous difficulties with paper-based trade transactions, such as restricted transparency, slow physical document transfer, and a lack of audit trail.
Such infrastructure could aid in the prevention of banking fraud, which has seen high-profile instances such as the one involving diamantaire Nirav Modi in recent years.
LPPL is always searching for methods to improve and reinvent its functioning and procedures, and the blockchain-enabled SLDE is one example of that,” said Zoher Diler, Lalit Pipes & Pipes’ chief financial officer.
We intend to lower our carbon impact while providing transparency… to our many internal and external stakeholders by using SLDE.”
The laborious procedure of completing an end-to-end LC transaction normally takes a week or two. However, digitising the process cuts the time in half.
For example, once LPPL has registered with SLDE and completed a transaction with Axis Bank, it will only take a few hours to complete a similar transaction with a different partner the next time it applies.
“Generating and storing logistics records using the SLDE platform would improve efficiency, assist with audit trails, and leave a greener transaction imprint in the future,” says the company “ArcelorMittal Nippon Steel India’s deputy chief financial officer, Amit Harlalka, stated. “AM/NS India is always searching for ways to better the function… The partnership with Axis Bank is a step in that regard.”
SLDE transactions allow for the construction of a record of activity that serves as an audit trail for all parties involved in security enhancement.