The LC processing time was reduced from the standard 5-10 days to under 24 hours
The Hongkong and Shanghai Banking Corporation (HSBC) Bangladesh recently carried out the first-ever cross-border blockchain letter-of-credit (LC) transaction in Bangladesh, involving the import of 20,000 tons of fuel by United Mymensingh Power Limited, Bangladesh from Singapore.
This was the first of such a transaction executed from Bangladesh, which was completed using the Contour platform and the LC processing time was reduced from the standard 5-10 days to under 24 hours, said a press release.
Md Mahbub ur Rahman, chief executive officer, HSBC Bangladesh said: “I am very pleased that HSBC has pioneered Bangladesh’s first-ever cross-border Blockchain LC transaction. This showcases our strong commitment and ability to support cross-border trade by Bangladeshi businesses using cutting-edge technology platforms. I believe this will usher in a new era of routing international trade transactions as businesses and governments recognise the transparency, security and swiftness in performing tasks using Blockchain technology.”
This marks a significant step for Bangladeshi companies in the digitization of trade.
It makes doing business simpler and faster by reducing transaction times and boosts working capital efficiency, something that’s especially appealing to local firms navigating through the current economic challenges, the release added.
Moinuddin Hasan Rashid, group chairman and managing director of United Group, said: “We are very enthusiastic over the use of Blockchain technology for our imports. We understand that we are headed towards a digital era and we are ready to evolve in our effort to adapt to the changes. Fuel Oil LCs are highly time sensitive where every second counts and we believe this Blockchain technology will help to manage time efficiently and also ensure increased efficiency and better cost management.”
For the first half of 2020, Bangladesh’s trade under LCs was overUS$34 billion according to SWIFT.
HSBC has effectively pioneered Blockchain platform in many a country including but not limited to India, Dubai, Malaysia, Oman, Saudi Arabia, Singapore, South Korea and Vietnam.
The Contour platform is built using R3’s CordaBlockchain technology.
It links together banks and corporates on a decentralized trade finance network.