- The transaction saw United Mymensingh Power LTD import 20,000 tonnes of fuel.
- HSBC Bangladesh executed this transaction by leveraging the Contour platform.
- Per United Group’s CEO, the blockchain will help manage time efficiently while cutting costs.
HSBC Bangladesh has completed the first-ever blockchain-based cross-border Letter of Credit (LC) transaction in the country. A report unveiled this news on November 1, noting that the transaction involved United Mymensingh Power LTD, a power company based in Singapore. Reportedly, the deal saw the firm import 20,000 tonnes of fuel for its power plant.
According to the report, leveraging the blockchain helped minimize LC processing time from the current 5 to 10 days to less than 24 hours. The bank executed the transaction through the Contour Platform, which runs on R3’s Corda blockchain technology. The platform is owned by eight banks, including HSBC, ING, and Citi, and it seeks to connect a network of banks, corporates, and digital solutions across the globe.
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Commenting on this development, Md Mahbub ur Rahman, HSBC Bangladesh’s CEO said,
“This showcases our strong commitment and ability to support cross-border trade by Bangladeshi businesses using cutting-edge technology platforms. I believe this will usher in a new era of routing international trade transactions as businesses and governments recognise transparency, security and swiftness in performing tasks using blockchain technology. I am very pleased that HSBC has pioneered Bangladesh’s first-ever cross-border blockchain LC transaction.”
Simplifying business processes
Per HSBC, this move marks a significant milestone for Bangladeshi companies regarding the digitization of trade. The bank believes that the firms will be in a position to conduct business seamlessly by expediting transactions and cutting costs. HSBC noted that these improvements will help enhance the efficiency of working capital, a benefit that is reportedly appealing for local firms that are trying to find a way through the current economic challenges.
Explaining how blockchain-based cross-border LC transactions will help boost trade, Moinuddin Hasan Rashid, the group chairman and managing director of United Group said,
“Fuel oil LCs are highly time-sensitive where every second counts and United Group believes the blockchain technology will help manage time efficiently and ensure increased efficiency and better cost management.”
Rashid added that the organization is enthusiastic about leveraging the blockchain for its imports. He further cited that United Group is aware it is headed towards a digital time and that it is ready to make the relevant changes to adapt.
This news comes after SWIFT, a global provider of secure financial messaging services estimated that Bangladeshi trades under LCs were worth more than £26 million during the first half of 2020. As such HSBC Bangladesh believes the potential efficiencies for local firms are significantly sizeable.