As discussed in our previous post Banks looking out for Blockchain, SBI is really pushing it ahead to introduce “Bank-Chain”.
State Bank of India and BANK-CHAIN
As RBI’s research arm institute IDRBT (Institute for Development and Research in Banking Technology) issued a white paper in favour of BLOCKCHAIN, the under lying technology behind BITCOIN, State Bank of India along with Microsoft, IBM,KPMG and 10 other commercial banks are taking steps together to introduce a new technology in Banking sector called “BANK-CHAIN”.
What is Bank Chain?
Bank Chain would be a open ledger where information will be shared by different banks which would help them to identify,tackle and prevent frauds and speeding up the lending process to interested parties.Also it will be very useful for banks in case of trade finances such as bill discounting.
In layman’s term , consider BANK-CHAIN as a google spread sheet where information about a client,useful to banks will be put up,which can be viewed by any bank and thus after considering the information, it will take necessary action.
For e.g If a person A has taken up a loan from BANK X, and does not pays his EMI’s on time, BANK X would upload it in the BANK-CHAIN ledger and every bank would be able to view it. Now if person A goes to another bank for any further loan, his track record can be checked by other banks in Bank-Chain. Somewhat same like a CIBIL score but not in the context of just loan payments/defaults but also other information like KYC’s,etc.
Information on Bank-Chain will be viewable only by participating banks in this technology and would be secured, free from being altered, just like in Blockchain.
Along with SBI and other entities, ICICI Bank,YES BAnk and Axis Bank are also eyeing on similar technology.Well, in this era of digitization and automation, RBI must take steps to strengthen the Banking Sector by adopting appropriate technologies.
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