JPMorgan launches blockchain platform pilot to settle dollar transactions in India
Multinational investment bank JPMorgan (NASDAQ: JPM ) has announced the launch of a pilot to explore the possibility of settling interbank dollar transactions in India using blockchain technology.
JPMorgan will partner with several Indian financial institutions, including Axis Bank, ICICI Bank (NASDAQ: IBN ), Yes Bank, HDFC Bank (NASDAQ: HDB ) and IndusInd Bank. The report noted that the pilot would take place within the framework of India’s Gujarat International Finance Tec-City (GIFT City), an international financial center modeled to compete with Dubai and Singapore.
“By leveraging blockchain technology to facilitate transactions on a 24/7 basis, processing is instantaneous and enables GIFT City banks to support their own time zone and hours of operation,” said Kaustubh Kulkarni, an executive at JPMorgan India.
The pilot will run until the end of the year and will seek to improve the current state of interbank transactions, according to Kulkarni. Currently, foreign exchange transactions in India are marred by multiple delays, including non-settlement on weekends, a drawback associated with the SWIFT payment system.
Kulkarni said leveraging JPMorgan’s Onyx JPM Coin solution will enable round-the-clock settlement of transactions. However, the blockchain solution will only apply if participating banks have Nostro accounts with JPMorgan and are approved by the International Financial Services Center Authority.
Plans for the pilot have been in the works since March, with industry players suggesting the experiments could be extended beyond GIFT City. JPMorgan’s ambitious project follows the Reserve Bank of India’s (RBI) decision to launch a US dollar-settled domestic non-deliverable futures market in GIFT City.
JPMorgan has significant experience merging finance with blockchain, and co-founded Partior, a cross-border payments platform that uses distributed ledgers for its underlying infrastructure. Leading banking conglomerates DBS Bank, SMBC and Standard Chartered (NASDAQ: SCBFF) are experimenting with Partior for innovative international settlements.
India – The beehive of blockchain activity
In India, governments and businesses are determined to increase adoption levels in the country. Several blockchain learning modules have been launched to deepen the talent pool in the country despite a tougher stance on digital currencies by the RBI.
Still, the country believes it can achieve a 46% blockchain adoption rate through integration in key sectors such as supply chain, finance, security and real estate. Although the RBI and the Ministry of Finance seem less enthusiastic about adopting blockchain in the financial sector, state and municipal authorities rely on the technology for record keeping and streamlining administrative processes.
India will be the largest blockchain nation in 5 years: IPv6 Forum’s Latif Ladid
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