Currently, the impact of blockchain is being globally felt as its presence and capabilities is said to change the way a person perceives the internet to be. It is becoming a part of financial institutions around the world, but what would be its impact in India and how would such technology benefit the Indian economy, remains to be of uttermost curiosity.
The Reserve Bank of India (RBI) has successfully tested the blockchain technology for the application of trade. A pilot study was conducted by the RBI on domestic banks and other financial institutions. However, blockchain is being adopted in stock exchanges and trade platforms in India.
Possibilities Of Using Blockchain In India
- The adoption of the blockchain technology to automate trade settlements and transactions can prove to be cost-cutting for most financial institutions in the country.
- An In-depth study and implementation of the blockchains technology by the central bank will help the growing Indian Bitcoin community.
- Blockchain technology will eliminate multiple processes saving time and cost.
- With the RBIs own modified laws on blockchain technology, a new model will be set for the banking sector in India.
- India’s land ownership system is filled with fraud that happens on a family bloodline. Thus, the government of Andhra Pradesh has partnered with a Swedish startup to build blockchain technology and maintain transparency with online records buy enabling a distributed ledger technology (DLT) via the blockchain.
The only drawback of blockchain technology is that, only few financial institutions understand what a blockchain really is and the benefits of using such a technology. A distributed ledger technology allows information to be stored in vast groupings which are tamper-proof. It is basically maintained across a network of computers around the world and does not have a central authority, thus functioning in a transparent manner.
Recent Adoption Of Blockchain In India
- On October, 2016, ICICI Bank announced its successful completion of pilot transactions via its blockchain network with Emirates on a custom blockchain application, wherein a transaction was executed to showcase confirmation of import of steel by a Mumbai based export-import firm.
- Axis Bank, also announced the use of an alternative blockchain technology called ‘Ripple’ on a trial basis. However, it is in the process of testing it for cross-borders payments. Kotak Mahindra has initiated a blockchain pilot study for transactions in cross-border transactions and trade settlements.
- In November 2016, IBM and Mahindra & Mahindra conducted a pilot study to enable supplier to manufacturer trade finance transactions through a permissible distributed ledger. The blockchain designed for Mahindra & Mahindra was to designed to transform supplier to manufacturer trade finance.
It is just the beginning and yet early signs do indicate the budding usage and adoption of the technology in India. While most central banks like, Bank of Canada, People’s Bank of China and Monetary Authority of Singapore have begun testing digital currency applications, the India Central Bank has chosen to take a cautious approach that has made them wait and watch the blockchain development through several case studies.
Advantages Of Blockchain In The Indian Economy
A blockchain removes a huge number of intermediaries relating to cost. For instance, the State Bank of India (SBI) approximates a reduction of 7% with the adoption of the blockchain and 15% cost reduction in compute, network and storage requirements.
Speed & Mapping
A blockchain transaction that involves any intermediaries would benefit the blockchain. Take for instance the case of a supply chain. A supply chain mechanism is considered time consuming as it goes through various stages of supply. You are not aware of whether the product has really passed onto each stage. However, with the use of a blockchain, every step of the supply chain can be mapped.
While the adoption of the blockchain is still in its budding stage, most analysts believe that banks will start embedding blockchain solutions in their entire ecosystem. It’s adoption by a number of huge corporations, point out to a larger vision of Digital India and the Government’s efforts for digitization. The country has witnessed a dramatic increase in Bitcoin adoption by the central bank and will thereby help in the growing Indian Bitcoin community.