AM/NS India Executes Paperless LC Transaction with ICICI Bank
PTI reported that AM/NS India has executed a paperless bill discounting transaction in partnership with ICICI Bank. AM/NS India said “The end-to-end electronic transaction, comprising digital issuance of letter of credit, advisory and presentment of documents took place among AMNS India, its Baroda-based customer Vijay Tanks and ICICI Bank.”
ICICI Bank was the intermediary between the buyer and seller. The bank’s branch in Baroda, Gujarat, issued an LC for the buyer Vijay Tanks, while its branch at Hazira advised and negotiated for the seller AMNS India. The terms of the LC required AMNS India to digitally present the documents to ICICI Bank evidencing the transaction flow.
In paper-based trades, physical goods at times arrive before their supporting documents, leading to corporates incurring demurrage charges. In the present day, the process of issuing LC is very slow as it requires human support to prevent frauds, authenticate transactions, and balance the ledger, which needs to be manually done. To make this process easy, many banks in India are coming forward to make use of Blockchain technology. It is a digital system that can record the information where the possibility of cheating and hacking the systems are eliminated. Blockchain technology is capable of solving all central issues along with elemental frauds. A total of 15 banks have agreed to use this new blockchain technology. Out of 15 banks, four are state-owned, 10 are private lenders and one foreign bank. The state-owned banks are the State Bank of India, Bank of Baroda, Indian Bank, and Canara Bank. The other 10 privately owned banks are ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank, RBL Bank, Industrial Bank, Yes Bank, South Indian Bank, Federal Bank, and IDFC First Bank. The lone foreign bank is Standard Chartered. All the major 15 banks are planning to form a new company called ‘Indian Bank’s Blockchain Infrastructure Company Private Limited investing INR 5 crore each, in dealing with transactions easily. The procedures for setting up this company are likely to be completed by June 30. The total capital of the IBBIC will be INR 75 crore.