In India, the cryptocurrencies may have failed to make any mark, but its underline technology, the blockchain is attracting significant attention. From state governments, public sector banks to big corporate houses are actively pursuing the use of blockchain technology.
The technology is not only limited to the development of cryptocurrencies but has the potential to change the way the global financial system works. For the government, it can bring a massive efficiency in the governance process and at the same can reduce the level of corruption.
Blockchain in Simple Term
If we can describe it in simple terms, it’s a distributed database that is recorded in multiple computers at the same time. The records are immutable and cannot be changed. The block in which data is stored is interlinked with the succeeding block and is constantly growing. That’s why it is called decentralized ledger, as no one person has the key to the entire network.
In order to tamper or manipulate with the blockchain, one needs immense computational power in order to take over the computational power of the entire network, which is near impossible.
Coming back to the topic, how much is the impact of blockchain and in what ways it has been used in India.
How Banks are Using?
In India, banks, both public and private sector are aggressively testing the use-cases of blockchain technology. Also, the banks and NBFCs are hiring the most number of techies out with blockchain experience. Some of the initiatives are as follows:
State-lender, SBI is the leading player in developing blockchain-based processes among peers. It is leading a consortium of 30 banks to develop BankChain, a blockchain-enabled KYC solution.
ICICI Bank recently executed its first cross-border transaction on blockchain in partnership with Emirates NBD. More than 250 corporates have already boarded the bank’s blockchain network.
Syndicate Bank is going to use blockchain technology to shorten its ATM reconciliation process. Through this initiative, the bank aims to shorten its reconciliation process to 2 days from the existing 5 days.
A group of 11 public and private sector banks are working on a blockchain platform to link the lending process for small and medium enterprises (SME) to completely overhaul the existing lending process.
Payments and settlement company, NPCI is also contemplating the use of blockchain technology to provide a boost to digital payments.
How Corporates are Using?
Reliance Industries has acquired 5.56 per cent stake for Rs 35 crore in UK-based blockchain firm, VAKT Holdings. VAKT is a consortium of leading global energy companies in which Reliance is also a member, uses blockchain to develop solutions for the problems faced by the industry. Reliance has also executed India’s first blockchain trade finance transaction.
TCS is now the leader in providing blockchain services and is continuously in news for its R&D in the sector. Earlier this year, TCS had conducted the world’s first cross border securities settlement on the bitcoin’s underline technology.
Another Indian IT major, Tech Mahindra is also leading the development of blockchain ecosystem in the country. It has set up blockchain centre at its Hyderabad campus. It has also inked pact with Telangana government to develop India’s first blockchain district.
Other big companies like Hindustan Unilever, ABG Shipyard, HDFC Bank, Reliance Industries are running blockchain pilots for internal treasury management.
How Governments are using?
Many state governments are using this technology in basic, yet important processes like land registry processes, issuing birth certificates and other governance processes. Currently, governments southern states like Telangana, Andhra Pradesh, Tamil Nadu, Maharastra are leading and extensively exploring use-cases for blockchain technology.
Though India has not made a mark with cryptocurrency adoption are keeping a closed attitude towards it, but its underline technology is very well accepted. The main constraint for the sector is lack of talents in the space which is limiting its growth. In the time to come, this blockchain technology will be part of most of the organisation and governments due to its effectiveness and efficiency.