Reserve Bank of India approves firm to deploy blockchain solution for cross-border payments

Reserve Bank of India approves firm to deploy blockchain solution for cross-border payments
Reserve Bank of India approves firm to deploy blockchain solution for cross-border payments

Open Financial Technologies, an India-based start-up banking company, is set to deploy its blockchain-based cross-border transaction monitoring solution following approval from the Reserve Bank of India (RBI).

According to a report by the finance-focused news agency Quartz, Open Financial Technologies will first launch its solution called BankingStack in the US-India corridor. Financial institutions operating in the corridor can use the enterprise banking product to launch digital banking solutions within weeks.

The product is based on open source blockchain technology and allows parties involved in transactions to keep track of every step of any transaction. According to Anish Achuthan, co-founder and CEO of the startup, the solution brings immutability to cross-border payments.

“…when the payment happens there is also a ledger that records where the payment is at each point in time. So immutability is brought into the entire transaction, where no transaction is lost from the system,” said Achuthan.

Achuthan added that the company is looking to partner with banks to “offer a range of products for cross-border payments and trade finance” that will benefit millions of SMEs in India.

Open Financial Technologies is one of four firms that the RBI approved to deploy blockchain-based cross-border payment products as part of the second cohort of its Regulatory Sandbox program earlier this month. Others include Cashfree Payments India Private Limited, Fairex Solutions Private Limited and Nearby Technologies Private Limited.

The project started in September 2021 with 27 applications from the 26 units that have been thinned out through live testing of their products. The approval also comes amid the dollar crisis in India and is billed to help ease the stress on importers and exporters.

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RBI explores more deployment of blockchain technology

Apart from the private sector partnership, the RBI also has plans to make blockchain technology a part of India’s core banking system. Last month, the central bank announced an initiative in which it is partnering with major commercial banks to use blockchain technology to operate a trade finance platform.

Under the project led by RBI’s Bangalore-based Innovation Hub, banks can maintain blockchain-backed tamper-proof Letter of Credit (LC) records.

The innovation hub has held a workshop with the participating banks and has support from US-based companies, including IBM and Corba Technologies, as well as Belgium-based SettleMint.

This is in addition to the digital rupee central bank digital currency (CBDC) RBI is working on and plans to unveil gradually from next year.

See: BSV Global Blockchain Convention presentation, BSV for Retail Payments, Remittances & Rewards

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