A subsidiary of Bangalore-headquartered multinational information technology giant, Infosys, is to work with six banks to pilot India's International Financial Services Centres Authority's (IFSCA's) blockchain-based trade finance solution.

Infosys Finacle and the banks will initially pilot a blockchain-based buyers credit solution utilising the blockchain-based Finacle Trade Connect solution, which incorporates digital letter of credit (L/C) processing.

Regulatory sandbox

As India's unified authority for the development and regulation of financial products, financial services and financial institutions, IFSCA has initiated an ambitious 'regulatory sandbox' framework that allows fintechs and other innovators to conduct live experiments in a controlled environment under the regulator's supervision.

Federal Bank, HDFC Bank, HSBC, ICICI Bank, RBL Bank and State Bank of India are collaborating with Infosys Finacle in the first phase of the blockchain-based trade finance regulatory sandbox.

Concept testing

This collaboration aims to lead to comprehensive testing of a blockchain-based buyers credit solution, for short-term credit in foreign currency for import payments and trade finance transactions.

This is expected to serve as a precursor to the solution being available as a software-as-a-service offering for all banks servicing clients at the Gujarat International Finance Tec-City, which has been set up as a fintech hub.

Service scope

Finacle Trade Connect helps banks, corporates, and various trade partners, such as shipping companies, insurers, and customs agencies, connect directly on a unified distributed network enabling inter-organisation automation of trade finance processes.

Apart from buyer's credit, the solution offers capabilities for processing several offerings, including L/Cs, bank guarantees, open account, invoice financing and factoring.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.