SUMMARY
The Platform Will Be launched In Association With 30 Banks And Will Assist In Data-Driven Price Discovery
While Bitcoin is still treated with scepticism in India, both the private and government players are adopting its underlying tech – blockchain with open hands. Reportedly, India’s largest public sector bank, State Bank of India is looking to create a blockchain-based exchange for Non-Performing Assets (NPA’s).
To be launched in association with 30 banks, this platform will assist the banks in data-driven price discovery.
“The public sector lender along with other banks, asset reconstruction companies, and investors, will soon develop a blockchain based exchange for handling the menace of Non-Performing Assets (NPAs),” said Sudin Baraokar, Head Innovation, SBI.
SBI is said to have assets over $460 Bn and offers services in areas such as retail, corporate banking, financing, and insurance. The Indian banks are said to have to battle with NPA’s worth $210 Bn of which $30 Bn resides with SBI alone.
Apart from data-driven price discovery exchanges, SBI is also planning to rope in trade finance and loan exchanges.
SBI: Betting Big On Blockchain
Earlier, in February 2017, SBI announced its plans to launch a BankChain in association with 27 other banks from India and the Middle East. ICICI Bank, Kotak Bank, DCB Bank and Axis Bank are also part of this Community. BankChain aims to reduce fraud and maximise efficiency, security & transparency in the banking systems. The community has also collaborated with Pune-based Primechain Technologies.
SBI is also using an enterprise blockchain solution for managing its Know Your Customer (KYC) system. The solution is built on Hyperledger Sawtooth, a modular platform for developing and deploying blockchains, developed by Intel.
As reported by the ET, the new blockchain solution will boost the efficiency of financial institutions without compromising on data confidentiality and transaction security.
As an SBI official stated in a recent media statement, “By leveraging blockchain components such as Intel SGX and Hyperledger Sawtooth and Primechain’s expertise to build blockchains, we can realize emerging fintech services such as P2P lending, crowdfunding and digital marketplaces that enables financial inclusion.”
Recently, the media corridors were buzzed with many high profile cases where the borrowers left the Indian banks gaping for their money and turning loans worth billions into NPA’s. Nirav Modi, the famous diamantaire defrauded the PNB bank with a huge sum of $1.7 Bn (INR 11400 Cr). Also, how a group of 17 Indian banks are trying to collect approximately $1.4 Bn (INR 9000 Cr) in loans which Kingfisher Airlines owner Vijay Mallya has allegedly routed to gain 100% or a partial stake in about 40 companies across the world, is not a mystery now.
While utilisation of technology has many benefits, it comes with its own cons as well. If not utilised well, it can create serious regulation issues for the banks and the results could certainly affect millions. The idea of introducing a blockchain based solution for doing the price discovery of NPA’s is essentially the need of the hour. However, how soon SBI will be able to truly bring this into the process, and it will be efficient enough to curb these million dollar scams, will be something to watch out for.
