Consortium of 11 Indian Banks Launch Blockchain-Linked Funding for Small Businesses

Eleven Indian banks have joined an initiative that may change the way small businesses obtain loans, via blockchain.

The blockchain-linked loan system will focus on small and medium enterprises and aims to remove communication barriers between India's largest banking providers.

A consortium of India's eleven largest banks launched the first ever blockchain-linked loan system in the country.

"A blockchain network can only thrive if the entire ecosystem is working in synergy through a single network."

Representatives from some of the largest banks in India have been working on setting up a live network that will make supply-chain financing more efficient and secure.

The network will reportedly enable big lenders to access public credit data, which would remove much of the risk associated with the lending process.

"A common blockchain network harmonizes the requirements and lets everyone see the flow of the trade on a single platform," he explained.

Apart from the eleven main members of the consortium, three banks are participating by funding the initiative as outside members-IndusInd Bank, State Bank of India and Bank of Baroda.

The Blockchain Infrastructure Company, a consortium based in India, is organizing the meetings between the participating banks.

Leveraging distributed ledger technology makes sense both for the providers and consumers-banks will be able to attract more small and medium enterprises into the formal credit system, while businesses could benefit through potential cost reductions and lower settlement times.