Financial services company, HSBC India and ING Bank Belgium have recently executed a blockchain based trade transaction, enabling digital transfer of cross border payments from a U.S. based company to Indias Reliance Industries.

As per an official press release, HSBC claims that a Letter of Credit (LC) was issued by ING Bank for United States’ Tricon Energy Inc., with HSBC India as the negotiating and advising bank for Reliance Industries, India, and the transaction will allow a fully digitalized transfer of title of the goods from the seller to the buyer in an underlying trade.

The transaction validates a commercial and operational viability of blockchain as a substitute to conventional exchanges for paper-based documentation. Currently, buyers and sellers use paper-based letters of credit (LCs) to complete transactions, which needs to be sent to each party by post, fax or courier, eventually increasing unwanted costs and chances of delay, HSBC added.

Reportedly, eight renowned banks namely, Bangkok Bank, HSBC, ING, BNP Paribas, SEB, CTBC Holding, NatWest, and Standard Chartered together with U.S.-based enterprise blockchain software firm R3 are working on an open source-based system with plans to expand the network and drive adoption across the industry.

According to Business Today, Srikanth Venkatachari, Joint CFO of Reliance Industries, said that the use of blockchain will offer a significant potential to reduce the present seven-ten days timelines involved in exchange of export documentation to less than a day, eventually offering less time consuming, faster cross border transactions.

Hitendra Dave, HSBC’s Head Global Banking and Markets, was quoted saying that the use of blockchain will have a significant impact on trade finance transactions and would enable greater transparency and security, further making it simpler and faster.

The overall efficiency blockchain brings to trade finance guarantees quicker turnaround, cost effectiveness, and potentially unlocks liquidity for businesses, Dave added.