Tata Steel has executed a blockchain enabled paperless export order with a metals major in Bangladesh. This makes it the first such deal executed between an India based company and a counterparty in Bangladesh assisted by different banks at respective ends. This transaction was facilitated by Standard Chartered, India, and was conducted on Contour’s blockchain trade platform, which enables banks, corporates, and other trade partners across the world to transact with each other.
Standard Chartered Bank advised and confirmed the letter of credit (LC) favouring Tata Steel basis instructions received over Contour and was also able to present documents to the Buyer’s Bank over the platform. This helped in early resolution of discrepancies and reducing the overall turn-around-time from weeks to days.
The seamless transmission of LC and e-presentation of document between the two different banks at both ends via the platform under three hours is a testament to reduced paperwork and time and increased operational efficiency brought about by this solution.
Rajeev Singhal Vice President (Flat Products), Tata Steel, said: “Tata Steel has made pioneering efforts this year to digitally transform its trade practices that are sustainable, efficient, and also saves time. We are glad and more confident now that we have executed the first multi-bank blockchain enabled trade. The technology along with the pivoting efforts of Tata Steel provides efficiency and agility in enabling a better customer interface. The Covid-19 pandemic has highlighted that technology will lead the way of doing business in future and experimentation using blockchain for better customer experience is one such step towards enabling this transformation.”
This integrated solution using blockchain technology allows all parties involved in the transaction to communicate on a single platform in real time. It aims to reduce processing time by digitising the entire LC process and eliminating the operational inefficiencies as compared to traditional paper-intensive process of LCs. Further, this technology also enhances the safety of transactions. The information can be shared only with other authorised members on the network and is immutable, reducing the risk of data manipulation and fraud while increasing transparency for all parties involved in the transaction.
Earlier this year, Tata Steel executed its first blockchain enabled trade and this will be its first multi-bank transaction out of India. The Company is committed to move towards digitally enabled transactions which will help in seamless and efficient trading practices in the future.