Yes it is True…..India’s First Blockchain based network went live last week, wherein three online bill discounting exchange platforms came together and implemented a solution for their operations.
The three platforms that offer Trade Receivables Discounting System or TReDS are Receivables Exchange of India, A.TReDS and M1xchange who implemented the system in the enterprise financial segment.
TReDS facility was introduced by RBI, to facilitate the MSMEs who could get finance from corporate buyers on their Trade Receivables, through multiple financiers. No cryptocurrency has been brought in to the system for settlement. Live production of Blockchain globally is seen only in few places according to MonetaGo which is a US based blockchain firm working with central institutions and financial organizations globally to implement blockchain. The salient features of this implementation are:
- All three platforms work independently and are interlinked with blochain and share data.
- Through this implementation, MSMEs will be able to get better rates and discounts.
- This will facilitate SMSEs to present their bills of exchanges after sale of their products, and financing companies would discount them.
- At present, three active exchanges being available, buyers and sellers would be able to register on all three platforms, thus leading to a possibility of the same bill being discounted again. This will not happen with the introduction of Blockchain.
- Double invoicing will be avoided, as also fraud financial will be curbed. Also, MSMEs spending time on compliance issues will be avoided.
- Bills discounting on online platforms has great potential since 1-2 per cent of it has moved online and the implemention of blockchain in the initial stage is seen as a mile stone in the enterprise finance segment.
- In line with Government directives, all public sector enterprises will register on these bills discoiunting platforms to enable MSMEs to get much wanted liquidity.
- Also, variety of trade finance instruments will be brought on the blockchain networks and series of implementations are in the offing.
- RBI’s Institute for Development and Research in Banking Technology has completed a proof-of-concept of blockchain technology for a typical trade finance application, with the participation of National Payments Council of India and banks.
RBI has approved the implementation of blockchain technology for the financial sector, but has not approved cryptocurrency which was an innovation around ten years back.
The blockchain technology used in the bill discousnting network is said to be of Hyperledger Fabric.
Note: Blockchain is a system of distribution of digital information but not copied.