Victor Ugochukwu · Dec 14, 2020 . 5min read
Standard Chartered Bank executes First Blockchain transaction in Bangladesh
Standard Chartered Bank has executed its first blockchain transaction by issuing an LC for a readymade garment exporter via the Contour blockchain network.
By Komal Joshi · Aug 16, 2020 . 9min read
According to a press release, Standard Chartered Bank has triumphantly executed its first blockchain transaction by issuing an LC (Letter of Credit) for garment exporter, Viyellatex Ltd via the Contour blockchain network. Standard Chartered Bank acted as the issuing Bank for the applicant and the advising Bank for the LC’s beneficiary.
However, it took place locally; Standard Chartered would soon extend the services for cross-border exports and imports. Considering that, everything will be paperless except for some regulatory processes of the Bangladesh Bank and customs formalities. Standard Chartered is the largest international bank in Bangladesh, with more than 115 years in the country.
“We are extremely proud to have introduced blockchain technology in Bangladesh for trade transactions,” said Naser Ezaz Bijoy, chief executive officer of Standard Chartered Bank, Bangladesh. “We are very excited to be offering our clients improved speed and reduced risks of settlement offered by platforms such as Contour,” he added.
Maximum garment exporters source raw materials like textiles, yarn and accessories narrowly by inland LCs. The process is very tedious with loads of paperwork. Additionally, Viyellatex has to prepare an application requesting LC. Then the employee has to go to the bank with the printed application to submit it.
A designated person from the supplier has to come to the bank to obtain a copy of the order after the bank’s scrutiny. Following, the supplier offers an invoice after shipping the items, and a person from Viyellatex collects it. When Viyellatex affirms, the bank makes payment to the supplier.
Contour Network Enhances Issuance of Letter of Credit
However, with the Contour network, the entire transaction between Standard Chartered Bank and Viyellatex seems smooth and paperless. Contour offers a distributed trade network allowing an improved degree of collaboration over the main trade elements. All participants leverage the network to build and renew trade data in real-time.
Contour promotes data transparency, eliminates administration costs, and decreases friction in global trade. Developed on R3’s Corda blockchain, it leads to an overall increase in efficiency and reduced costs for all parties. Standard Chartered is one of the founding members of Contour, benefited from Contour’s network. Contour network helped in simplifying the LC process, instant discrepancy resolution, delivering shorter settlement times, and simplified sanctions screening.
“Global trade lacks a solution that drives out inefficiencies, improves data transparency, and enables interoperability between all trade participants. The long-established elements of trade finance do not have sufficient integration, ultimately causing friction and unnecessary administration,”said Carl Wegner, CEO at Contour network.
Standard Chartered’s Prospective Blockchain Project
However, the citizens of Bangladesh have much in store after this blockchain-based Letter of Credit. Standard Chartered is also working on blockchain-based service for expatriate Bangladeshis in Malaysia, the fifth-highest source of remittance for the country, allowing them to transfer money home on a real-time basis.
According to the release, the remitters will send in their hard-earned money in real-time by starting a mobile wallet with Malaysian fintech firm Valyou, a Telenor Group subsidiary. In Malaysia and Bangladesh, Standard Chartered would notify the amount from Valyou. Once in Bangladesh, bKash would distribute the supplies, completing the chain of cross-border transactions that harnesses technology’s power.
Summing up, Standard Chartered is the first Bank to issue a Letter of credit from Bangladesh. It has maintained its position as one of the top trade banks in the country. With Standard Chartered issuing LC’s, we look forward to many more blockchain-based projects in Bangladesh.
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